ACA News & Publications

ACA Pathways: Agencies Release New Cobra Guidance / Updated Notices

May 12, 2014

The Departments of Labor (DOL), Health and Human Services (HHS), and Treasury (collectively, the Agencies) recently issued several pieces of guidance regarding COBRA to clarify the impact of the establishment of the Health Insurance Marketplace (Marketplace) under the Affordable Care Act (ACA) that became effective January 1, 2014:

  • First, on April 21, 2014, HHS issued a Frequently Asked Questions (FAQ) clarifying the situations in which a COBRA qualified beneficiary may enroll in a qualified health plan through the Marketplace and receive subsidies for that coverage.
  • Then on May 2, 2014, the DOL released proposed regulations that would amend the COBRA notice requirements to reflect changes made by the ACA, and would make it easier for the model notices to be updated in the future. At the same time, the DOL released updated versions of the model general notice and model election notice under COBRA to reflect that the Marketplace is now open and better describe special enrollment rights in Marketplace coverage. The DOL also updated the model notice required under the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA).
  • Also, on May 2, 2014, the Agencies published FAQs on a variety of topics, including the updates to the COBRA and CHIPRA model notices. In addition, HHS issued a clarifying bulletin, providing information related to certain special enrollment periods for persons seeking to enroll in qualified health plans through the Federally-facilitated Marketplace (State-based Marketplaces are encouraged to adopt similar special enrollment periods), including guidance related to a special enrollment period for COBRA enrollees.

Updates to COBRA Model Notices

Under COBRA, group health plans must provide qualified beneficiaries with certain notices explaining their COBRA rights.

  • General Notice: The general notice must be provided to qualified beneficiaries within 90 days after initial plan coverage begins.
  • Election Notice: In certain circumstances, a group health plan must also provide qualified beneficiaries with an election notice, which describes their rights to continuation coverage and how to make an election. The election notice must be provided to the qualified beneficiaries within 14 days after the plan administrator receives the notice of a qualifying event.

In conjunction with the proposed regulations released on May 2, 2014, the DOL has updated its model notices that plans may use to satisfy these notice requirements. According to the DOL, some qualified beneficiaries may want to consider and compare alternatives to COBRA coverage, such as coverage that is available through the Marketplace as they may be eligible for a subsidy and may find that Marketplace coverage is more affordable than COBRA.

The model general notice now includes basic information about Marketplace coverage and provides a web 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 deciding between COBRA, 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 need not be included on the notices provided to plan participants.

Until the proposed regulations are finalized and effective, the DOL will consider use of the model notices, which are available on its website (links below), appropriately completed, to constitute compliance with COBRA's notice content requirements.

Updated CHIPRA Notice

CHIPRA permits states to offer eligible low-income children and their families a premium assistance subsidy to help pay for employer-sponsored group health coverage. Under CHIPRA, if an employer's group health plan covers residents in a state that provides a premium subsidy, the employer must send an annual notice about the available assistance to all employees residing in that state. The DOL has issued a model notice that employers can use to comply with CHIPRA. On May 2, 2014, the DOL revised this model notice to include updates related to Marketplace coverage.

Limited Special Enrollment Period for Current COBRA Enrollees

There is a limited special enrollment period for individuals who are already eligible for or enrolled in COBRA coverage. Based on concerns that the previous model notices did not sufficiently address Marketplace options, affected individuals will have through July 1, 2014 to enroll in coverage through a Federally-facilitated Marketplace. 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.

The model general notice is available at http://www.dol.gov/ebsa/modelgeneralnotice.doc

The model election notice is available at http://www.dol.gov/ebsa/modelelectionnotice.doc

The FAQs can be found at http://www.dol.gov/ebsa/faqs/faq-aca19.html

The CMS Bulletin is available at http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/SEP-and-hardship-FAQ-5-1-2014.pdf and proposed regulations are available at http://www.gpo.gov/fdsys/pkg/FR-2014-05-07/pdf/2014-10416.pdf

For More Information
For more information about this ACA Pathways or about any other health care reform-related provisions, please contact your Burnham Benefits consultant or Burnham Benefits at:

Burnham Benefits
949.833.2983
inquiries@burnhambenefits.com


This ACA Pathways is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. The information contained in this ACA Pathways includes emerging health care news from a limited perspective and does not encompass all views. The information was selected from a wide range of sources selected on the basis of their potential impact on employers and/or their employee benefit plans. For more information, please contact Burnham Benefits.

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