©2023 Seyfarth Shaw LLP www.seyfarth.com 2023 Cal-Peculiarities | 321 California law operates with respect to employers too small to be covered by federal COBRA and with respect to periods following the federal COBRA period.27 Under Cal-COBRA, employers of 2-19 employees must offer 36 months (not just 18) of continuation coverage.28 Cal-COBRA provides an extension for those who have exhausted their 18 months on federal COBRA (or 29 months for disabled individuals) for a total extension that cannot exceed 36 months. 29 This special Cal-COBRA extension applies to insured plans where the employer’s master policy is issued in California. If the group master policy is not issued in California, then the employer must employ 51% or more of its employees in California and have its principal place of business in California. The legislation directly regulates only the health care service plan or insurer, and not employers as such. But presumably an employer will find it more expensive to purchase group coverage as the provider knows that it has a 36-month continuation coverage tail as well as mandatory conversion coverage obligations. In addition, many insurers require the employer to notify them of a Cal-COBRA qualifying event. California has a Health Insurance Premium Program (HIPP), by which the state will pay the insurance premiums of qualifying individuals under COBRA, Cal-COBRA, or OBRA (the extension of COBRA for up to 29 months for disabled individuals). California employers of 20 or more employees must give a HIPP notice to terminating employees.30 California employers must give a notice of rights to convert group medical coverage into individual coverage, within 15 days of the termination of group coverage.31 Termination doesn’t occur until the end of any continuation period (e.g. COBRA, extensions, OBRA).32 8.4 Mandatory Employer-Funded Health Care 8.4.1 Health care security laws Employers generally can decide whether to provide health care to employees (subject to penalties under the Patient Protection and Affordable Care Act for certain employers who do not provide a minimum level of health insurance coverage to full-time employees). In California it’s different, or at least it is in San Francisco. The San Francisco Health Care Security Ordinance requires employers engaging in business in the City of San Francisco that have on average at least 20 employees during a quarter to make “health care expenditures” for their employees who work in San Francisco or to make payments directly to the City.33 The Ninth Circuit has upheld the San Francisco ordinance against a challenge that ERISA preempts the ordinance.34 On November 10, 2020, San Francisco’s Board of Supervisors unanimously passed yet another Covid-related ordinance: the Healthy Airport Ordinance.35 This Ordinance amends the HCAO to require employers of employees covered by the Quality Standards Program at SFO to either: (a) provide family health insurance at no cost to those employees; or (b) contribute to a Medical Reimbursement Account at the City on the employees’ behalf at a rate of $9.50 per hour worked. The Healthy Airport Ordinance applies to employees covered by SFO’s Quality Standards Program (QSP). This Resolution required the implementation of minimum standards for hiring, training, performance management, and compensation and benefits for employees covered by the QSP. QSP-covered employees are those who either: (1) require Airport Badge issuance with Airfield Operations Area (AOA) access, and work in and around the AOA to perform their job duties; or (2) are directly involved in passenger and facility security or safety (e.g., checkpoint screenings, passenger check-ins, and skycap and baggage check-in and handling). Employers of QSP-covered employees must choose to either provide them with no-cost family health insurance (including coverage for their dependents) or pay $9.50 per hour (up to $380 per week) on behalf of the employee to the City Option Program.36
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