Now Available: Newly Revised COBRA Model Notices
In May, the DOL issued revised model COBRA notices that include information about buying individual coverage through a health care exchange (now called a “Health Insurance Marketplace”) as an alternative to COBRA coverage. This is an important development because employers are required by law to send out notices to both new and departing staff members. This article explores the details and impact of the DOL’s newly updated model notices.
Newly revised COBRA model notices now available
Employers must use notices to inform new hires of their rights to continuation health care coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). Employees must also be informed via a notice of their right to buy COBRA coverage when departing from a job.
Just this past May, the Department of Labor (DOL) issued revised model COBRA notices that include information about buying individual coverage through a health care exchange (now called a “Health Insurance Marketplace”) as an alternative to COBRA coverage.
The model general notice now includes basic information about Marketplace coverage and provides a website address for more information. The model election notice, which was already revised in 2013 to include basic Marketplace information, now includes more detailed information about:
- Marketplace coverage,
- Enrollment opportunities and restrictions,
- Financial assistance, and
- Factors to be considered in choosing COBRA coverage, Marketplace coverage or other alternatives.
An unrelated item of interest in both notices is a new instruction page that, among other things, confirms that the Paperwork Reduction Act Statement doesn’t need to be included on notices provided to plan participants.
In conjunction with the updated model notices, the DOL issued proposed regulations that would facilitate easier updating of model notices going forward. The proposed regulations would remove the model notices contained in the 2004 final COBRA regulations and allow the DOL to maintain the model notices on its website — revising them as necessary to reflect current law.
On the same day the new COBRA models were released, the DOL, Department of Health and Human Services, and Treasury jointly published a list of frequently asked questions (FAQ) on a variety of related topics. The first FAQ explains that updated model COBRA notices are available on the DOL website and notes that, until the regulations are finalized and effective, use of the updated models, appropriately completed, will constitute compliance with COBRA’s notice content requirements.
The FAQ also notes that another model notice, which employers can use to satisfy their obligation to provide information to employees residing in states offering premium assistance under Medicaid or the Children’s Health Insurance Program, has been revised to add a reference to Marketplace coverage.
Special enrollment periods
Also on the same day, the Centers for Medicare and Medicaid Services issued a bulletin announcing several new special enrollment periods in the federal Marketplace. Relevant to COBRA is a limited special enrollment period for individuals who are already eligible for or enrolled in COBRA coverage.
The July 1 deadline for individuals to enroll in coverage through the federal Marketplace was prompted, at least in part, by concerns that previous model notices didn’t sufficiently address Marketplace options. The bulletin reiterates that qualified beneficiaries who elect COBRA are generally able to enroll in a Marketplace only during open enrollment or an applicable special enrollment period, or upon expiration of their COBRA maximum coverage period.
Although use of the DOL’s model notices isn’t mandatory, many plans use the models as the basis for their own notices. Plan sponsors, COBRA administrators and advisors should therefore familiarize themselves with the revised model notices and adapt their own notices accordingly.
In addition, plan sponsors need to have a general understanding of the alternative coverage options available through the Marketplace system and be prepared to direct qualified beneficiaries to the appropriate Marketplace for more information.