California Health Insurance Premium Program Notice Requirement


The California Labor Code Section 2807 imposes a notice requirement on every California employer who is subject to the federal COBRA health insurance continuation requirements. This notice requirement alerts terminated employees of the possibility that their health insurance premiums may be paid for through the California Health Insurance Premium Program (HIPP).

Health Insurance Premium Payment Program

The Health Insurance Premium Payment Program was established under Section 120835 of the Health and Safety Code and Section 14124.91 of the Welfare and Institutions Code. It is a program that will pay health insurance premiums for certain persons who are losing employment and who have a medical condition that requires treatment. The over-riding principal guiding the HIPP program is whether it would be cost-effective for the DHS to pay the premium for third-party coverage.

Paying for third partying health insurance is not deemed to be cost-effective if:

  1. A Medi-Cal beneficiary is also enrolled in Medicare;
  2. There has been full reimbursement for health care premiums; or
  3. A beneficiary is enrolled in a Medi-Cal managed care plan.

It is also important to note that the HIPP program cannot be ordered by the court. So, if a non-custodial parent is ordered by the court to provide medical coverage, then there is no eligibility for HIPP.

Notice Requirement

A standardized notice of the Health Insurance Premium Program is available from the California Health and Human Services Agency (DHS). The notice informs terminated employees of the existence of the program and the eligibility requirements. To be eligible for HIPP the applicant must:

  1. Have full scope or fee-for-service Medi-Cal;
  2. Have a medical condition that requires treatment with a cost-savings to Medi-Cal of 1.1 or greater; and
  3. Have a current health insurance policy that covers the medical condition or a COBRA policy in effect at the time of the application

The notice also provides information about how to apply for the benefit. An employee fills out an application form available from the California Department of Health Care Services. New applications are typically processed within 30 days of receiving all required documentation. Complete information about the process is available from the DHS.

COBRA Notice Requirements

Whenever an election of COBRA is required to be sent by an employer, California employers are also directed to provide notice of HIPP. California Labor Code Section 2807 is silent as to the timing of notice, but does say that notice is required, "along with the notification required" by COBRA. The assumption is that the same notification time period applies.

A COBRA election notice is required to be provided 14 days after notification of a qualifying event. Based on the language of the statute, both the COBRA election notice and the HIPP notice would need to be sent within 14 days of the notice to the plan administrator of a qualifying event.

Recommended Action

We suggest that each employer ensure that a copy of the HIPP notice is provided to each terminating employee at the time such employee is provided the COBRA health insurance continuation notice. Since such notices are often provided by a third-party plan administrator, it would be prudent for the employer to direct that the HIPP notice be sent as well.