California group health insurance, COBRA and Cal-COBRA

Group medical expense is 8 of the Accident & Health questions, mixing federal laws with California's own rules for small groups, domestic partners and continuation.

Questions and answers, explained

All 12 questions above, with the correct answer and why it is correct. Everything here is on california group health insurance, cobra and cal-cobra.

1. Under the California objectives, how are small and large group health plans defined by number of employees?

   • ASmall groups have up to 10 employees
   • BSmall groups have 2 through 50 employees; large groups have 51 or more, as in most other states
   • CAny group under 500 is small
   • DSmall groups have 2 through 100 employees; large groups have 101 or moreCorrect

   Why: CDI's A&H objectives define small groups as 2 through 100 employees and large groups as 101 or more. Small group coverage is guaranteed issue.

   Reference Cal. Ins. Code 10270.5-10270.57; CA A&H objectives III.B.1.a

2. A small California business wants the federal small business health care tax credit. Which conditions apply under the objectives?

   • AAt least 500 employees
   • BOnly nonprofit employers qualify
   • C25 or fewer employees, and buying through Covered California for Small BusinessCorrect
   • DUp to 100 employees, buying from any insurer whether on or off the exchange

   Why: Businesses with 25 or fewer employees may be eligible for federal premium tax credits, but they must buy coverage through the Covered California for Small Business (CCSB) program.

   Reference CA A&H objectives III.B.3.b

3. Federal COBRA does not apply to employers with fewer than 20 employees. Which California law gives continuation rights to employees of employers with 2 to 19 employees?

   • AFMLA
   • BCal-COBRACorrect
   • CHIPAA, which guarantees that every former employee can keep group coverage for life
   • DERISA

   Why: Cal-COBRA provides continuation coverage for employees of small employers (2 to 19 employees) not subject to federal COBRA, and can extend coverage for people whose federal COBRA ran out, up to a combined 36 months.

   Reference Cal-COBRA (Cal. Ins. Code 10128.50 et seq.); CA A&H objectives III.B.4.i

4. An employee of a 200-person company is laid off. Under federal COBRA, how long may he continue the group health coverage, paying the premium himself?

   • AUp to 36 months, the maximum COBRA period for any qualifying event
   • BFor life, as long as he pays
   • CUp to 18 monthsCorrect
   • DUp to 6 months

   Why: COBRA applies to employers with 20 or more employees and allows up to 18 months of continuation after termination or reduced hours, up to 29 months for a disabled beneficiary, and up to 36 months for dependents after events such as divorce, death or aging out. The beneficiary may be charged up to 102 percent of the premium.

   Reference COBRA 1985; CA A&H objectives III.B.4.b

5. Which federal law sets standards for most private employer-sponsored benefit plans, including fiduciary duties and disclosure to participants?

   • AERISACorrect
   • BThe Pregnancy Discrimination Act, which governs how employers treat pregnancy in benefit plans
   • CThe Fair Credit Reporting Act
   • DMedicare

   Why: The Employee Retirement Income Security Act (ERISA) governs most private employer benefit plans, setting fiduciary standards, reporting and disclosure requirements and claims procedures. COBRA and HIPAA amended it to add continuation and portability rules.

   Reference ERISA; CA A&H objectives III.B.4.a

6. Under Insurance Code section 10121.7, how must a California group health policy treat an employee's registered domestic partner?

   • AAs ineligible, because only legally married spouses may be covered as dependents
   • BThe same as a spouse for dependent coverageCorrect
   • CAs eligible only for dental coverage
   • DAs eligible only after five years of registration

   Why: Section 10121.7 requires health policies to provide coverage for an insured's registered domestic partner equal to the coverage provided to a spouse. Dependent coverage rules for employees appear in section 10270.65.

   Reference Cal. Ins. Code 10121.7, 10270.65 — CA A&H objectives III.B.1.c

7. During an employee's leave under the Family and Medical Leave Act, what happens to her group health coverage?

   • AThe employer may cancel her coverage after one week
   • BThe coverage ends, and she must elect COBRA and pay the full premium during the leave
   • CThe coverage is converted to an individual policy
   • DThe employer must keep the coverage on the same terms as if she were workingCorrect

   Why: FMLA lets eligible employees of covered employers (generally 50 or more employees) take up to 12 weeks of unpaid, job-protected leave a year, during which the employer must maintain group health coverage on the same terms as if the employee had kept working.

   Reference FMLA; CA A&H objectives III.B.4.e

8. Under the California objectives, which arrangement is prohibited by regulation in California group health insurance?

   • ASelf-insured 'association' health plansCorrect
   • BEmployer-paid HMO plans
   • CHealth savings accounts
   • DFully insured small group plans sold through Covered California for Small Business

   Why: CDI's objectives note that self-insured association health plans are prohibited by regulation. Employers may still self-fund their own plans, and fully insured plans, HSAs and HMOs are permitted.

   Reference CA A&H objectives III.B.1.b.ii

9. A small employer with no group plan wants to reimburse employees tax-free for individual health insurance premiums. Which arrangement is designed for this?

   • AA Medicare supplement
   • BCOBRA continuation
   • CA Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)Correct
   • DA flexible spending account funded only by the employees' own salary reductions

   Why: A QSEHRA lets a small employer that offers no group health plan reimburse employees, tax-free, for individual coverage premiums and medical expenses up to annual limits. An ICHRA works similarly for employers of any size that want to fund individual coverage.

   Reference CA A&H objectives III.B.3.c

10. A married couple each have group health insurance through their own employers, and both plans cover their young daughter as a dependent. The father was born on March 12, 1988; the mother was born on January 30, 1990. Under the coordination of benefits provision's birthday rule, which plan pays first on the daughter's claims?

    • AThe father’s plan, because he is the older of the daughter’s two covered parents
    • BWhichever plan the claim happens to be submitted to first
    • CThe mother’s plan, because her birthday falls earlier in the calendar yearCorrect
    • DBoth plans pay 50% of every claim the daughter incurs

    Why: Under the birthday rule, the plan of the parent whose birthday (month and day, ignoring the year) comes first in the calendar year is primary for dependent children — January 30 precedes March 12, so the mother's plan pays first. The parent's age is irrelevant; coordination of benefits exists to prevent duplicate recovery, with the secondary plan paying remaining eligible expenses up to 100% of the covered charges.

    Reference CA A&H objectives III.B (Group medical expense insurance)

11. In an employer group health plan, who receives the master policy and what do covered employees receive as evidence of coverage?

    • AEach employee receives the master policy; the employer keeps the certificates
    • BEach employee receives an individual policy identical to the employer's contract
    • CThe employer receives the master policy; employees receive certificates of insuranceCorrect
    • DThe Department of Financial Services holds the master policy; the employer receives a certificate

    Why: In group insurance there is one contract — the master policy — issued to the policyholder (the employer or other sponsor), while each covered person receives a certificate of insurance summarizing benefits and rights. This is a core difference from individual insurance, where each insured owns a policy. Group underwriting evaluates the group as a whole rather than each member individually.

    Reference CA A&H objectives III.B (Group medical expense insurance)

12. A group health plan is contributory, meaning employees pay part of the premium. What minimum participation level does an insurer typically require?

    • A100% of eligible employees
    • BAt least 75% of eligible employeesCorrect
    • CAt least 50% of eligible employees
    • DNo minimum, because employees are paying part of the cost

    Why: Insurers customarily require about 75% participation in a contributory plan so that healthy employees do not opt out and leave a pool weighted toward higher-risk lives. Choice A is the requirement for a NONCONTRIBUTORY plan, where the employer pays the entire premium and all eligible employees must be covered — the strongest protection against adverse selection.

    Reference CA A&H objectives III.B (Group medical expense insurance)

Drill the whole domain

• Group Medical Expense Insurance (5.3%)

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