Federal COBRA and state continuation

Cost of continuation coverage

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 HealthSherpa 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.

Plan options

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).

Is my company subject to federal COBRA or state continuation?

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 that you have.

Federal COBRA

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.

Eligibility

• Federal COBRA generally applies to companies with at least 20 full-time employees or full-time equivalents (FTEs) for 50% of their working days in the previous calendar year.
• If your company has fewer than 20 full-time employees, but the hours worked by part-time employees reach a certain threshold, the company may still be eligible for federal COBRA.
• A part-time employee is counted as a fraction of a full-time employee then added to the FTE total. Calculate your FTE total here.

State continuation 

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.

Eligibility

• State continuation laws are sometimes called "mini-COBRA."
• State continuation generally applies to companies with less than 20 full-time employees and FTEs for 50% of their working days in the previous calendar year.
• Companies not subject to federal COBRA are usually subject to the state continuation in the state where the company's insurance plans are written out of.
• California's state continuation is called Cal-COBRA. Go to the "Cal-COBRA" section below for more info.

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 don’t 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.

Federal COBRA

We’ll provide an administrator, BASIC, for companies subject to COBRA to make sure that employees are handled correctly at no additional cost. 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: 

1. After your last day of work, BASIC sends a continuation notice to your home/mailing address. The notice explains your rights and next steps to continue your current coverage. 
2. The dismissed employee has 60 days from the date they lost coverage, or the date the COBRA election notice was received, to enroll (whichever happens last). Follow the instructions in the continuation notice to enroll yourself and contact your insurance carrier if you have any questions. 

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.  

State continuation

If you were enrolled in benefits and leave your company, here’s what to expect: 

1. We’ll email you 3 business days after your last day of work notifying you of your rights to continue coverage at your own expense. You can find the full notice in the Documents section of your Gusto account.
   • Based on state law, the notice explains what lines of coverage you’re entitled to continue (dental and vision may not be available in every state), and how long the coverage can last. 
2. If you want to continue your coverage, refer to the notice for next steps. In states where the carriers allow Gusto to submit your enrollment, you can enroll right from the Benefits section. Otherwise, follow the instructions in the notice to submit your enrollment to the carrier.  
   • Pay attention to your deadline to enroll, which is usually 30–60 days after the loss of coverage.
3. Once coverage has been reactivated, we’ll instruct the employee to send a check with the premium amounts to your company (or carrier, if applicable). Your company’s benefits admins will receive a detailed email with enrollee-specific information.
   • Note: The employee will stay on your company's invoice and the employer is responsible for collecting these premiums from the employee each month moving forward. If they fail to pay, let us know ASAP so we can terminate the policy with the carrier. If the carrier is responsible for state continuation, you’ll need to work with them directly. 
4. To cancel coverage, employees will need to let us know so we can cancel with the carrier. If your carrier is administering the state continuation (meaning you enrolled yourself in continuation coverage directly with the carrier), the enrollee must contact the carrier to cancel.

What is Cal-COBRA?

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: 

1. The employee is dismissed from your company or becomes ineligible for benefits. 
2. If Gusto is the broker of your company’s benefits, and the employee was enrolled in coverage, we’ll email the employee once their continuation notice is available. They’ll find it in the Documents section of their Gusto account.
   • If your company offers benefits through another broker, reach out to them directly with Cal-COBRA questions. 
   • Dismissed employees can still access their Gusto account as long as they have access to the email they use to sign in.
3. The insurance carrier sends the employee an enrollment form 7–10 days after their original coverage ends. 
4. The employee can either enroll in Cal-COBRA or find a new plan on the individual marketplace. 
   • To enroll in Cal-COBRA: follow the instructions on the form to submit their enrollment directly to the insurance carrier. Gusto can't facilitate your enrollment, so contact the carrier directly with any questions. 
   • To shop for another plan: Carriers charge a 10% administration fee for Cal-COBRA, so we encourage employees to check out other options. We’ve partnered with HealthSherpa to help people find individual health insurance as an alternative to continuation coverage. HealthSherpa will help with enrollment and find subsidies you may be entitled to.

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. 

Carrier enrollment and contact info

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.

Aetna 

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 

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 Dental 

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.

California Choice  

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 

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 

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.

Delta Dental

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].

Dental Select 

The monthly cost of your dental Cal-COBRA coverage will be 110% of your normal premium. Contact the carrier with any questions at (800) 999-9789 or [email protected].

Eye Med 

Eye Med will send you a Cal-COBRA packet to the mailing address that they have on file. If you don’t receive the packet in 7-10 business days after your dismissal, you can call (888) 439-3633 to request it. Once you receive the packet, fill it out and email it to [email protected]. 

Guardian 

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.

Health Net 

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.

Inshore 

Inshore will send a Cal-COBRA packet to the mailing address they have on file for you. Once you receive the packet, follow the instructions to enroll Cal-COBRA coverage. Contact Inshore at [email protected]. 

Kaiser Permanente

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.

MetLife 

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 

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].

UnitedHealthcare

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 

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.