Earlier this month, the Department of Labor (DOL) issued proposed amendments to the COBRA notice regulations and released updated model notices for the COBRA general notice and the COBRA election notice.
Proposed Regulations. The proposed changes in the actual regulations are largely unremarkable. The DOL is basically proposing to give itself the ability to update the model COBRA notices at any time by posting a new one to its website, rather than actually amending its regulations each time a model notice is updated. (The original model notices were issued as appendices to the actual regulations.)
The preamble to the proposed regulations provides some assurance that the new model notices may be relied on even though the regulations aren't final: “Until rulemaking is finalized and effective, the Department of Labor will consider use of the model notices available on its website, appropriately completed, to be good faith compliance with the notice content requirements of COBRA. The Department notes that the use of the model notices is not required. The model notices are provided solely for the purpose of facilitating compliance with the applicable notice requirements.”
New Model Notices. Both the model general notice and the model election notice have been updated and posted to the DOL website.
- General Notice. Ignoring the ARRA COBRA-subsidy notices (remember those?!), this is the first update to the model general notice since 2004. Other than some general wordsmithing, the primary change is to add some general discussion of Marketplace coverage and the related premium-assistance tax credits and cost-sharing reductions. The goal appears to be to illustrate the availability of Marketplace coverage as an alternative to COBRA.
- Election Notice. The model election notice was previously updated in May 2013 to add some discussion of Marketplace coverage as an alternative to COBRA. The revised notice expands on that by providing more detailed discussion of how the Marketplace open enrollment and special enrollment periods operate and also providing a list of factors to consider when deciding between COBRA coverage and other available coverage (e.g., Marketplace coverage or coverage through a spouse).
Is Use of the New Model Notices Required? The DOL notes several times that use of the model notices is not required. And, in fact, a review of the content requirements for the general notice (29 CFR 2590.606-1(c)) and the election notice (29 CFR 2590.606-4(b)(4)) indicates that nothing added to the new model notices is clearly required under the regulations. For example, although the election notice is required to include an “explanation of the consequences of failing to elect or waiving continuation coverage,” there does not appear to be a specific requirement to describe other types of coverage that may be available, such as Marketplace coverage or coverage through a spouse’s plan.
However, the modifications to the notices provide information that generally will be useful to COBRA qualified beneficiaries, particularly the discussion in the election notice regarding the operation of the Marketplace enrollment periods and the factors to consider in deciding whether to keep existing coverage. In addition, the DOL effectively deems plans and employers to be in compliance with the notice requirements if the model notices are utilized (with appropriate modifications). So while use of the DOL model notices is not required, it generally would be advisable, barring some specific concern or objection by a particular plan or employer.
Effective Date. Neither the proposed regulations nor the new model notices specifically address when the new model notices take effect. But it appears they are immediately effective upon posting to the DOL’s website.
That does not mean COBRA notices issued before the new notices were published need to be re-issued, even for qualified beneficiaries that are in an open COBRA election period. And it obviously takes some time for employers and administrators to update their COBRA systems and processes. But as soon as administratively practicable, it is advisable to begin using notices that are based on the new model notices.