Employers should be aware that, on May 2, 2014, the U.S. Department of Labor released proposed regulations that modify the model notices deemed to satisfy the notice content requirements of COBRA.
Pursuant to COBRA, group health plans are generally required to notify each covered employee and qualifying beneficiaries of their right to continue coverage under the plan after certain qualifying events, such as termination of employment. Notices must be provided both at the time coverage commences (i.e., the General Notice) and at the time of the qualifying event (i.e., the Election Notice). Until regulations are finalized, the use of the new model COBRA notices, appropriately completed, constitute good faith compliance with COBRA content requirements.
As modified, the model COBRA notices greatly expand on language meant to inform plan beneficiaries of the health coverage alternatives available on the Health Insurance Marketplace, as well as special enrollment rules. For instance, notice recipients are now advised they have 60 days from the time they lose job-based coverage to enroll in Marketplace coverage. Note, however, that this special enrollment period does not necessarily apply to state-based exchanges (i.e. states that set up their own exchange, rather than rely on the federal exchange) because each state-based exchange may choose whether to adopt such an enrollment period.
When deciding on which coverage option to elect, notice recipients will need to consider cost and timing. With regard to cost, notice recipients may find that the health coverage offerings on the Marketplace have lower premiums than COBRA coverage. If notice recipients elect Marketplace coverage, however, any healthcare expenses incurred prior to enrolling in Marketplace coverage will not be covered. This stands in contrast to COBRA coverage, which can cover expenses retroactive to the qualifying event.
Although use of the DOL’s new model COBRA notices is not mandatory, it is generally recommended. The modified notices are currently available at the DOL’s website, and must be completed by inserting information specific to the group health plan where appropriate.