COBRA, Cal-COBRA, and CalSavers for Employers

On this page: Health coverage after an employee leaves | Deadlines and notices | If you stop offering a plan | Gross misconduct | Retirement savings (CalSavers)

Health Coverage After an Employee Leaves

COBRA and Cal-COBRA let a departing employee keep your group health plan by paying for it. They apply when employment ends for almost any reason, not only a layoff: quitting, being fired, being laid off, retiring, and having hours cut can all qualify, with gross misconduct as the one carve-out.

Continued health coverage law by employer size.

Your headcount	Law	How long coverage lasts	Most you can charge
20 or more employees	Federal COBRA	Up to 18 months after a separation or cut in hours. Up to 36 months for other events, such as an employee’s death or divorce.	102% of the plan cost
19 or fewer employees (two to 19 eligible employees)	Cal-COBRA	Up to 36 months	110% of the plan rate (150% for disability months after the first 18)
One employee	Neither law applies by its terms	Your plan contract may still offer continued coverage.	Set by the plan

Deadlines and Notices

The employee’s time to elect. Under federal COBRA, the employee has at least 60 days to elect, counted from the later of the date coverage ends or the date the plan sends the election notice. The employee does not have to pay the first premium until 45 days after electing. Under Cal-COBRA, the employee must ask for coverage in writing within 60 days after the later of the date coverage ends or the date the plan sent the notice, and the employee must pay the first premium within 45 days after electing. 29 U.S.C. §§ 1162(3) (opens in a new tab), 1165(a)(1) (opens in a new tab); Cal. Health & Safety Code § 1366.24(b) (opens in a new tab).

Your time to give notice. You have 30 days after a qualifying event, such as a termination, to notify your plan or plan administrator. The plan or administrator then has 14 days to send the employee the election notice. Federal COBRA sets those periods at 29 U.S.C. § 1166(a)(2) (opens in a new tab), (c), Cal-COBRA sets them at Cal. Health & Safety Code § 1366.25(a) (opens in a new tab), (e), and when an insurance company issues your plan, Cal. Ins. Code § 10128.55 (opens in a new tab) sets the same 30-day and 14-day periods. When you are also the plan administrator under federal COBRA, you have 44 days to send the election notice, counted from the qualifying event or, if your plan measures from the loss of coverage, from that date. 29 C.F.R. § 2590.606-4(b)(2).

Notice from a spouse or dependent. The family, not you, reports some events. Under federal COBRA, the employee or the family member must notify the plan administrator within 60 days after a divorce, a legal separation, or a child ceasing to be a dependent. Under Cal-COBRA, the family member must notify the plan in writing within 60 days after the employee’s death, a divorce or legal separation, loss of dependent status, or the employee’s Medicare eligibility. 29 U.S.C. § 1166(a)(3) (opens in a new tab); Cal. Health & Safety Code §§ 1366.21(d) (opens in a new tab), 1366.24(b) (opens in a new tab).

When coverage starts. If the employee elects COBRA in time, and pays the premium on or before the due date, coverage generally runs from the date the employer coverage ended, so no gap results. Treas. Reg. § 54.4980B-6, Q&A-3; Cal. Health & Safety Code § 1366.24(b) (opens in a new tab).

State notice about Medi-Cal premium help. Every California employer, whatever its size, must give former employees the state’s Health Insurance Premium Payment (HIPP) description, a Medi-Cal program that can help pay health insurance premiums. The statute ties the notice to the federal COBRA notice, and the state’s form is titled “Notice to Terminating Employees,” so give it when employment ends. An employer too small for federal COBRA must still give it. Cal. Lab. Code § 2807 (opens in a new tab).

If You Stop Offering a Plan

COBRA and Cal-COBRA depend on your plan. When you end your group health plan altogether, or you never offer one, continued coverage ends or never begins, because no plan exists to anchor it. When you switch carriers or plans, covered former employees generally move to the new plan for the rest of their coverage period. 29 U.S.C. § 1162(2)(B) (opens in a new tab); Cal. Health & Safety Code §§ 1366.23(b) (opens in a new tab), 1366.27(a)(7) (opens in a new tab), (b).

Gross Misconduct

Both laws exclude an employee terminated for gross misconduct. Employers and employees can dispute what counts as gross misconduct for this purpose, so a termination that affects health coverage deserves a second look before the employee leaves. 29 U.S.C. § 1163(2) (opens in a new tab); Cal. Health & Safety Code § 1366.21(d)(2) (opens in a new tab).

For planning around a separation, see Reductions in Force, Layoffs, and Furloughs and Severance and Settlement Agreements.

If this or other issues arise in your workplace, contact Michael Trust Law, APC for help with resolving them or for a compliance review.

Retirement Savings (CalSavers)

California does not require you to offer a retirement plan. But if you have one or more eligible employees and no qualifying plan, you must register with CalSavers, the state’s payroll-deduction retirement program. The deadline for employers with one or more employees was December 31, 2025.

CalSavers enrolls each eligible employee automatically unless the employee opts out. The CalSavers board sets the default savings rate, and the rate can change from year to year, but it currently starts at 5% of pay. Contributions come out of the employee’s paycheck, and you send them to the program.

You are exempt if you offer a plan that qualifies for favorable federal tax treatment, such as a 401(k), a 403(b), a 457(b), a SIMPLE plan, a simplified employee pension plan, or an automatic-enrollment payroll-deduction IRA. A business with no employees other than its owners is not covered. Cal. Gov’t Code §§ 100000 (opens in a new tab), 100032 (opens in a new tab).

When to Contact Us

If you have not registered, or you are not sure whether your plan qualifies, contact Michael Trust Law, APC for help with registering or for a compliance review of your plan.

If your business has an employment matter that needs attention, contact Michael Trust Law, APC. That includes a lawsuit, a demand letter, or a letter or charge from an agency, where deadlines can be short, so please call or email right away. It also includes a compliance review, a handbook, a policy, or a workforce decision that you want done right the first time. A no-charge consultation is a first conversation about your own situation, and we will tell you whether and how we can help. Interpreting these laws for your business is legal work, and we do it as part of an engagement.

No attorney-client relationship exists until a fee agreement is fully executed by all parties. See Disclaimers.

Cal. Health & Safety Code §§ 1366.20 (opens in a new tab)-1366.29 (opens in a new tab); Cal. Ins. Code §§ 10128.50 (opens in a new tab), 10128.55 (opens in a new tab); Cal. Lab. Code § 2807 (opens in a new tab); 29 U.S.C. §§ 1161 (opens in a new tab)-1163 (opens in a new tab), 1165 (opens in a new tab), 1166 (opens in a new tab); 29 C.F.R. § 2590.606-4; Treas. Reg. § 54.4980B-6; Cal. Gov’t Code §§ 100000 (opens in a new tab), 100032 (opens in a new tab).