The U.S. Department of Labor has recently issued technical guidance revising the model COBRA notices. The new models reflect the availability of healthcare under the exchanges established by the Patient Protection and Affordable Care Act (ACA or “Obamacare”) and are designed to alert employees and their dependents to the other healthcare options available under the new federal healthcare exchanges. The notices suggest that individuals compare the cost of COBRA coverage to that of other insurance available on the exchanges. Also, the new interim COBRA notices reference the tax credit that might be available to an individual to subsidize the cost of premiums, and include the deadline for applying for coverage under the exchanges.
The model COBRA notice and election, which an employer may modify to reflect its specific facts, are available on the U.S. Department of Labor website at http://www.dol.gov/ebsa/cobra.html. The initial COBRA notice is given to employees and spouses when their plan coverage begins. The election notice is distributed when a qualifying event such as the termination of employment occurs. To use the notices properly, a plan administrator must complete them with the appropriate information. While the use of the model notice and election form is not required, using the government forms shows good faith compliance with the new notice requirements.
Under the new requirements, employers are required to inform employees of:
- The existence of the healthcare exchanges;
- The fact the employee might be eligible for premium tax credits subsidizing the cost of the insurance premiums; and
- Any forfeiture of employer contributions that might apply if an employee purchases healthcare from an exchange.
Employees should also be made aware that there is a special 60-day enrollment period from the last day of employment to enroll in insurance offered under an exchange. If the employee misses the 60-day window, he or she must generally wait until the next open enrollment period to obtain coverage through the exchange. Other special enrollment periods may apply if the individual wants insurance from an exchange and has a second qualifying event such as marriage or birth of a child after termination of employment.
Until the federal guidance is put into final form, use of the proposed COBRA notices will be adequate to meet current COBRA guidelines.