The federal government recently released updates to the model Consolidated Omnibus Budget Reconciliation Act (“COBRA”) notices available to employers on the Department of Labor (“DOL”) website. The updated model notices clarify that additional cost-effective coverage options, including financial assistance under the Affordable Care Act (“ACA”), may be available for individuals eligible for COBRA continuation coverage.
A plan must provide a general notice of COBRA rights to each covered employee and spouse at the time employer-sponsored coverage begins. An employer has 30 days after a qualifying event to provide notice of that qualifying event to the plan. Qualifying events include a reduction in hours of employment, termination for any reason other than gross misconduct, eligibility for Medicare, death, and divorce, among others.
Plans must then provide an election notice within 14 days of receiving notice of a “qualifying event” to a qualified beneficiary. Children who cease to be eligible under a parent’s plan due to loss of dependent child status (i.e. reaching the age of 26) must also be provided with an election notice. The election notice informs eligible individuals of the right under COBRA to continue coverage for an 18-36 month period when health insurance coverage ends due to a qualifying event.
The revised notices are designed to make it clear to separating employees and qualifying beneficiaries that they may choose to purchase coverage through Covered California instead of enrolling in COBRA continuation coverage.
The updated model general and election notices also inform eligible individuals that there may be more affordable coverage options including enrollment in another group health plan (such as a spouse’s plan).
Although the DOL revised the model COBRA notices to include information about alternatives to COBRA continuation coverage, current COBRA notice requirements do not require employers to notify employees of these alternatives. Changes to the COBRA notice requirements have been proposed, but not yet formally enacted. Employers are not required to use the model notices and may create their own notices. Many employers choose to use the model notices because the DOL considers the use of the model notices to be good faith compliance with the content requirements of COBRA’s notice regulations.