CLIENT UPDATE

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May 21, 2014

DOL Guidance on COBRA Notice Requirements and ACA Marketplace Coverage

On May 2, 2014, the U.S. Department of Labor (“DOL”) released a new model general notice form and a new model election notice form for providing Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) notices to employees, as well as proposed rules.  The forms may be revised further pending issuance of final guidelines. The proposed rules revise the employer notification requirements for COBRA to align them with the Affordable Care Act (“ACA”) provisions that are already in effect.

The reason for the change in the notice is to provide a special enrollment period for COBRA-qualified beneficiaries who might prefer to obtain health coverage through the ACA’s Federal Marketplace (formerly known as the “Exchange”) rather than to continue their existing coverage under COBRA.  The revised notice form makes clear that a limited special enrollment period for COBRA-qualified beneficiaries is available from May 2, 2014 through July 1, 2014.  During this period any person who is currently enrolled in COBRA may voluntarily drop COBRA coverage and enroll in a qualified health plan through the Federal Marketplace (if otherwise eligible).    Ordinarily, without this special enrollment period, the person would have to wait until the next open enrollment period.  For Marketplace coverage starting in 2015, the proposed next open enrollment period is November 15, 2014 – January 15, 2015. Special enrollment periods are also available if a second qualifying event occurs, such as the death of a covered employee, the divorce or legal separation of a covered employee and spouse, the disability of a qualified beneficiary, a covered employee's becoming entitled to Medicare, or a loss of dependent child status.

The proposed new rules are designed for states, such as New York, that participate in the Federal Marketplace; it is not yet clear whether states that operate their own state marketplaces will follow the federal lead in this area. 

The links for the revised notice, other guidance and information helpful to understanding these changes are as follows:

Model notices and general information can be found at http://www.dol.gov/ebsa/cobra.html.

The DOL’s FAQ’s can be found at http://www.dol.gov/ebsa/faqs/faq-aca19.html.

The Centers for Medicare and Medicaid Services (“CMS”) guidance can be found at http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/SEP-and-hardship-FAQ-5-1-2014.pdf

Take Away for Employers

Employers (or their third party administrators) may consider revising their COBRA notices to reflect this temporary change for those who are receiving COBRA benefits. Use of the proposed model notice is not mandatory, but will be considered good faith compliance with the COBRA notice requirements until final regulations are issued by the DOL.

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If you have any questions regarding COBRA, ACA or related issues, please do not hesitate to contact us.