Benefits Administration Manual

Consolidated Omnibus Budget Reconciliation Act (COBRA)

413. COBRA Premiums

Premium Payment

If COBRA is elected, the cost for coverage will be 100% of the total premium, plus a 2% administration fee which is paid monthly by the enrollee to the plan or its designee. The plan or its designee is not required to send a monthly bill. The department is not required to pay a share of the COBRA premium. (Refer to Section 420 for premium rates and Section 421 for plan names and addresses.) If there is a change in future premium rates, then departments and enrollees will be notified as soon as possible prior to the new premiums going into effect.

Retroactive Premium Payment

Once COBRA is elected, the enrollee has 45 calendar days from the date of election to pay all retroactive premiums to the plan or its designee. The retroactive premium payment is the premium to cover the period from the date of loss of coverage to the date of election. All claims occurring during the months of retroactivity will be held pending premium payment being made.

Calculating the 45-Day Retroactive Premium Payment Period

The table below illustrates how the 45-day retroactive COBRA premium payment period works in the case of a qualified beneficiary whose employment terminates on May 17 and coverage is provided through the end of the next month. If the employee elects COBRA on August 4th, then the retroactive premium payment is not due until 45 days later (September 18).

Although the September premium is due by the first day of the month, there is a 30-day grace period for the premium due by September 1.

Note: If the 45-day retroactive premium due date ends on a Saturday, Sunday, or Holiday, then the due date will be extended to the next regular workday.

Future Monthly Premium

Once the retroactive premium is paid, future monthly premiums are due by the first of each following month. While due on the first, the enrollee will have a maximum thirty (30) day grace period following the due date in which to make these premium payments. All claims occurring during the month will be held pending premium payment being made. If the applicable payment is not made within the grace period, then coverage will be cancelled back to the end of the prior month in which a premium payment had been made. Once COBRA coverage is cancelled due to nonpayment of COBRA premiums the enrollee will not be reinstated.

Tolling of COBRA Payment Timeline

COBRA allows for the termination of COBRA coverage in the event an enrollee fails to pay a premium within the required payment period. However, if the enrollee is mentally or physically incapacitated to the extent that the person cannot pay the required premium, then the COBRA payment timeline will be "tolled". This means that the specific timeline is put on hold during the period of the incapacity or a guardian can be named to act on behalf of the enrollee. Each case will be evaluated on its own merits by the plan or its designee.

Partial Premium Payment Not Significantly Less

If the plan receives a partial monthly premium that is not significantly less than the premium due, then the plan or its designee will notify the enrollee of the amount of the deficient and allow a 30-day period for payment of the deficiency amount. All claims occurring during the month will be held pending receipt of the deficient amount. An amount is not significantly less, if the deficit is not greater than the lesser of the following two amounts:

(1) Fifty dollars ($50) or (2) 10 percent (10%) of the amount due.

Example: The amount due is $250 per month. The plan receives a COBRA payment of $230. The payment is $20 less than the premium due.

Result: Since the deficit ($20) is less than $50 or 10% of the amount due ($25), then the payment ($230) is not significantly less and the enrollee will be given a 30-day period for payment of the deficient amount.

Health Insurance Premium Payment (HIPP) Program

For Persons Eligible for Medi-Cal

The Health Insurance Premium Payment (HIPP) Program may pay COBRA premiums in certain cases for persons eligible for Medi-Cal. You may e-mail your questions to the Department of Health Care Services at: www.HIPP@dhs.ca.gov.

For Persons Disabled by HIV/AIDS

Under the Comprehensive AIDS Resources Emergency (CARE) Act of 1990, the Health Insurance Premium Payment (HIPP) Program may pay COBRA premiums for persons unable to work because of a disability due to HIV/AIDS. You may e-mail your questions to the Department of Health Care Services at: www.HIPP@dhs.ca.gov.

Trade Adjustment Assistance (TAA) Program

The Trade Adjustment Assistance (TAA) Program is a federal program. The TAA Program provides aid to workers who lose their employment or whose hours of work and wages are reduced as a result of increased imports or shifts in production out of the United States. Under provisions of the TAA Program, an eligible individual can receive a health coverage tax credit (HCTC) or advance payment for 80% of the applicable monthly premium to pay for COBRA continuation coverage. A special second COBRA election period is also available to eligible individuals. This aid will only apply to COBRA premiums to pay for medical insurance. For more information contact the Health Care Tax Credit Customer Contact Center at toll-free 1-866-628-4282 (TTD/TTY callers may call toll-free at 1-866-626-4282).

Alternative Trade Adjustment Assistance (ATAA) Program

The Alternative Trade Adjustment Assistance (ATAA) Program is a federal program. The ATAA Program provides aid to workers age 50 or older who lose their employment as a result of increased imports or shifts in production out of the United States and retraining may not be suitable. Under provisions of the ATAA Program, an eligible individual can receive a health coverage tax credit (HCTC) or advance payment for 80% of the applicable monthly premium to pay for COBRA continuation coverage. A special second COBRA election period is also available to eligible individuals. This aid will only apply to COBRA premiums to pay for medical insurance. For more information contact the Health Care Tax Credit Customer Contact Center at toll-free 1-866-628-4282 (TTD/TTY callers may call toll-free at 1-866-626-4282).

Updated February 14, 2011 at 3:40 PM.