COBRA Under Health Reform
COBRA has changed. Regulators recently issued guidance that affect both an employer’s COBRA obligations and COBRA beneficiaries’ opportunities.
New Special Enrollment for COBRA Beneficiaries
Under the Exchange (Marketplace) special enrollment rules, a person who has a COBRA qualifying event may enroll in an Exchange policy as a special enrollee when the person first becomes eligible for COBRA. A qualified beneficiary also may enroll mid-year as a special enrollee when COBRA expires. In both of these situations, the person is eligible to apply for a premium subsidy. However, a qualified beneficiary may not drop COBRA part way through the coverage period to enroll in Marketplace coverage unless he or she does so during open enrollment. Therefore, COBRA eligible beneficiaries can choose between COBRA and individual policies at three times, once at the inception of COBRA eligibility, at each open enrollment period and at the exhaustion of COBRA.
Updated COBRA Notices
The Department of Labor (DOL) has updated both the model General Notice of COBRA Continuation Rights and the model COBRA Continuation election notice to include information about the Exchange options. The model general notice now includes basic information about Exchange coverage and includes a Web address the participant can consult for more information. The model election notice, which was revised in 2013 to include information about the Exchange, has been revised again to include more detailed information about Exchange coverage, rules, and options. Employers are not required to re-distribute the General Notice, but they may wish to provide it as part of the next open enrollment period to help ensure that individuals who become COBRA-eligible consider the possibility of purchasing Marketplace coverage, rather than COBRA.
The election notice still must be provided to new qualified beneficiaries within 14 days after the plan administrator is notified that a qualifying event has occurred. There is also a 30-day period for an employer to notify the plan administrator that a qualifying event has occurred, so in many cases the notice does not need to be given until 44 days after the qualifying event. Employers may wish to provide election notices well before the deadlines to give qualified beneficiaries adequate time to choose between COBRA and Exchange coverage, since the special enrollment period for Exchange coverage ends 60 days after employer-provided coverage ends.
There is no deadline to begin using the updated notices, but employers should begin using them as soon as they can. The notices are models, so the employer may modify them to better fit its situation.
For further information about the health care reform requirements for your business, download UBA’s complimentary guide, “PPACA Compliance and Decision Guide for Small and Large Employers” from the PPACA Resource Center at http://bit.ly/1nHbaWv.