COBRA and state continuation are both laws that allow employees to continue health coverage under their company's group plan after they leave the company or have had their employment status change from full- to part-time.
For the employee, their plan will stay the same—the main difference is that they will pay their entire health premium plus an administrative fee.
For the employee, their plan stays the same and the main difference is their cost—they’ll pay 100% of the plan’s premium plus an administrative fee. If they choose to enroll, the payment between the employer and former employee is to be managed outside of Gusto.
Because the insurance carriers charge an administrative fee for continuation coverage, employees may find lower-cost plans with their state's individual market. We recommend Stride as a resource that helps people shop the individual market. They’ll help with enrollment and find subsidies that your employees may be entitled to. They also have an online portal where employees can change coverage, make payments, and renew their plans.
Employees are only eligible to enroll in lines of coverage they were actively enrolled in at the time of termination (i.e. if they previously waived dental coverage, they can’t enroll in dental COBRA coverage). However, if they were previously enrolled in more than one line of coverage (i.e. medical and dental) they can choose which lines to continue from the options available (i.e. continue medical and drop dental).
If Gusto's the broker of your insurance benefits, we automatically determine whether your company's subject to federal or state continuation.
Whether a company is subject to federal COBRA or state continuation is generally determined by the number of full-time and full-time equivalent employees you have.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal program that provides temporary continuation of health insurance when employer-sponsored coverage is lost. Employers with 20+ employees are required to offer COBRA as part of their group health plan. Learn more about COBRA from the US Department of Labor's website.
While federal COBRA applies only to employers with 20 or more employees, smaller employers may need to comply with state continuation laws. Many states have their own version of continuation coverage, known as state continuation or “mini” COBRA. States might require smaller employers to offer at least some form of coverage continuation, and they can also expand on the federal COBRA rules that apply to larger employers.
If your health benefits are managed by Gusto, or you have the broker integration and COBRA add-on, here’s what to expect when an employee leaves the company.
Remember: if you do not want to enroll in continuation coverage, you can also shop plans on the individual market. If you’re eligible, you can also enroll as a dependent on a spouse or parent’s existing plan. The termination of your current coverage is a qualifying life event that allows you to enroll outside open enrollment.
We’ll provide an administrator, BASIC, for companies subject to COBRA to make sure that employees are handled correctly. For companies who offer benefits with Gusto there is no additional cost. For companies using the broker integration, this is $30 per company per month.
If your company chooses not to use BASIC, you’ll be responsible for finding a third-party administrator to handle all aspects of COBRA.
If you were enrolled in benefits and leave your company, here’s what to expect:
Admins: Employees who opt into Federal COBRA will continue to be on your company's carrier invoice. BASIC will collect the funds from COBRA participants each month and forward them to the company (by check or ACH) so your company can pay the total invoice directly to the carrier.
If you were enrolled in benefits and leave your company, here’s what to expect:
Depending on size, companies are either subject to federal or state continuation coverage. For small California companies subject to state continuation, Cal-COBRA is a way for employees to continue health insurance after they leave the company.
Here's how the Cal-COBRA timeline works:
If you enroll in Cal-COBRA: Make sure to find out what your company’s renewal date is for the coverage. The carriers don’t inform Gusto about who is enrolled in your company’s Cal-COBRA, so reach out to us if you want to stay enrolled in continuation coverage after your company’s renewal date. Email [email protected] 1–2 months before your company’s renewal date and we’ll make sure you have access to the new plan year’s benefits.
Cal-COBRA is administered directly through the health insurance carriers, so follow the instructions below to submit your enrollment. Reach out to your insurance carrier with any questions.
Note: employees are responsible for enrolling and confirming coverage details directly with the insurance carrier. We've included carrier info below for your convenience but refer to your carrier for the most up-to-date enrollment instructions.
Call Aetna’s member services line at the number on the back of your ID card to request your Cal-COBRA enrollment packet and confirm your mailing address. Make sure to specify that you’re asking about the Cal-COBRA enrollment process. The packet normally takes 10-12 business days to arrive. If you haven’t received it after 12 business days, you can call (800) 297-7145. Once you receive the packet, fill out the forms and return them to Aetna. You’ll work with Aetna directly for all billing and enrollment. If you have any questions, call Aetna’s member services line.
Anthem automatically sends a Cal-COBRA letter to your mailing address after your last day of coverage. If you didn’t receive the letter, you can call (855) 854-1429 and request the letter be emailed to you. Once you receive the form, complete it and email it back to Anthem at [email protected]. If you have any questions, call Anthem at (855) 854-1429.
Beam will mail your Cal-COBRA enrollment packet to the mailing address that they have on file. Once you receive this packet, you can email [email protected] or call (800) 648-1179 to enroll or ask any questions. Beam will set up an open enrollment for you, which is their policy for all Cal-COBRA enrollees.
Blue Shield of California
Email [email protected] to request your Cal-COBRA packet, which will then be sent to your mailing address by Blue Shield of California. Once you receive the packet, fill out the forms and email them to [email protected] AND [email protected]. To follow up, ask questions, or expedite your enrollment, call (800) 228-9476. Tip: if you enter your Social Security number and date of birth, then ignore all prompts and say “other reason,” you’ll be connected to a representative.
CalChoice administers Cal-COBRA through a third party called Conexis WageWorks. After your termination, they should have sent paperwork to your mailing address that will allow you to sign up with Conexis. If you have any questions or haven’t received the paperwork, you can call CalChoice member services at (800) 558-8003.
CoPower will send you a Cal-COBRA packet to the mailing address that they have on file. Follow the instructions in the packet to enroll. You can call CoPower’s member services at (888) 920-2322 with questions or to expedite your enrollment.
Covered California sends a Cal-COBRA packet to your mailing address 10–14 days after the termination or reduction in hours is processed. Follow the instructions in the packet to submit your enrollment. Contact Covered California with questions at [email protected] or (877) 453-9198.
The monthly cost of your dental Cal-COBRA coverage will be 110% of your normal premium. Contact the carrier with any questions at (415) 989-7443 or [email protected].
Guardian will mail you a Cal-COBRA packet to the mailing address that they have on file. If you don’t receive the packet within 7-10 business days after your dismissal, you can call (800) 541-7846 to request it. Once you receive the packet, fill it out and email it to Guardian at [email protected]. If you have any questions or would like to start the enrollment process, call Guardian at the number listed above.
The monthly cost of your Cal-COBRA coverage will be 110% of your normal premium. If you have any questions, call Health Net at (800) 224-8808 or the number on the back of your insurance card.
You can call Kaiser at member services (800) 464-4000 to let them know you are interested in coverage and to request your Cal-COBRA packet. Make sure to specify that you’re asking about the Cal-COBRA enrollment process. If you have any questions, contact Kaiser at the number above.
Once you receive your Cal-COBRA packet, return the attached form to [email protected]. If you have any questions you can reach MetLife at (800) 275-4638 or (800) 942-90854.
Principal automatically sends your Cal-COBRA forms upon termination. Follow the instructions in the packet to enroll. Contact Principal with any questions at (800) 843-1371.
Sharp Health Plan
Sharp Health Plan mails your Cal-COBRA forms to the address we have on file. Once you receive the forms, follow the instructions in the packet to enroll. If you have any questions, email [email protected].
Your Cal-COBRA notice is automatically generated within 5 business days of your termination and sent to your mailing address. Once you’ve received it, you can go to www.uhcservices.com to register and make payments. Call (866) 747-0048 with any questions.
VSP sends your Cal-COBRA packet to the mailing address that they have on file. Once you receive it, follow the instructions in the packet to enroll. If VSP says that Gusto must send an enrollment form on your behalf, let us know at [email protected]. If you have any questions, call VSP's member services at (800) 877-7195.