There has been much confusion about Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage versus obtaining coverage through the Health Insurance Marketplace (the “Marketplace”) established by the Affordable Care Act (ACA).
Previously, COBRA Notices did not explain how COBRA eligible persons might obtain less expensive Marketplace coverage. There also was considerable confusion about whether an eligible person was required to continue available COBRA continuation coverage or could separately opt for Marketplace coverage.
COBRA continuation coverage is available to eligible individuals (qualified beneficiaries) who lose group health plan coverage due to certain qualifying events (such as job loss, divorce, employee death, and cessation of dependent child status). COBRA coverage is typically expensive (up to 102% of the full cost of group health plan coverage) and lasts for limited periods (e.g., 18 months after a termination of employment and 36 months for other qualifying events).
To address these issues, the government agencies have issued new guidance. On May 2, 2014, the Department of Labor (DOL) released a new model general notice form and model election notice form for providing COBRA notices to employees. The updates include Affordable Care Act (ACA) additions to pre-existing COBRA information concerning health care continuation coverage.
The updated notices clarify that if a qualified beneficiary becomes eligible for COBRA coverage due toa triggering event, the qualified beneficiaries may alternatively choose coverage through the Marketplace. By going to the Marketplace, they can also determine if they are eligible for federal subsidies.
To provide additional guidance, the DOL, the Health and Human Services (HHS) department and the Treasury, also published frequently asked questions and answers to the model notices.
Timothy Jost, a professor at the Washington and Lee University School of Law, posted a commentary on the Health Affairs Blog observing that earlier COBRA election model notices “did not inform COBRA beneficiaries of their right to exchange coverage. Because some potential beneficiaries were not therefore aware of their enrollment rights, HHS establishes a special enrollment period, allowing COBRA beneficiaries in states covered by the [federally facilitated Marketplace] until July 1, 2014 to drop COBRA coverage and enroll through the exchange by calling the Marketplace call center.”
If you have any questions about the updated notices or would like to discuss other employment law matters, please contact me or the Scarinci Hollenbeck attorney with whom you work.
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