Small businesses in California that provide group health plan coverage to their employees should take note: under a new California law that goes into effect January 1, 1999, employers that employ as few as 2 persons may have to provide continuation coverage under their group health plans. In general, under the California Continuation Benefits Replacement Act of 1997 ("Cal-COBRA" - Ch. 97-665), contracts offered by health care service plans and disability insurers covering employers with at least 2 employees must permit the employees, their spouses (or former spouses) and their dependents to elect to continue coverage at special group rates upon a "qualifying event" without evidence of insurability. A "qualifying event" includes (a) the death of the covered employee, (b) the termination of the employee (other than for gross misconduct) or reduction in hours worked, (c) divorce or legal separation, (d) loss of dependent status, and (e), for covered dependents only, the employee's eligibility for Medicare. The maximum Cal-COBRA continuation coverage period is: (a) 18 months for employees who lose coverage due to termination of employment or reduction in hours of work; (b) 36 months, if the "qualifying event" is based on divorce, separation, loss of dependent status or death of the employee, or (c) 29 months, if the individual is disabled.

This and other new legislation are discussed in this issue of the Employment Law Commentary for November 1998.

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