On May 2, 2014, the Department of Labor ("DOL") issued new model COBRA notices in conjunction with a proposed rule that would shift the role of the DOL's model COBRA notices from a helpful example to an indicator of required content. The new model notices have been revised to explain to individuals eligible for COBRA continuation coverage that they may elect to obtain coverage either through COBRA or the Health Insurance Marketplace ("Marketplace"), and how to go about enrolling. The new notices are available here and the proposed rule can be viewed here.
Once the proposed rule is finalized, employers will need to compare their notices to the model notices to ensure that it contains the required content. Until that time, the use of the new model COBRA notices is not required, but the DOL would consider their use (or the use of notices with similar content) evidence of good faith compliance with the proposed rule.
The new model COBRA notices contain several new concepts, including the following:
- Individuals eligible for COBRA are also eligible for a similar 60-day enrollment period for coverage obtained in the Marketplace. For COBRA, this period is counted from the date of the COBRA notice, and for the Marketplace, this period is counted from the loss of the job-based coverage.
- If coverage is not obtained through COBRA or the Marketplace during the applicable enrollment periods, then the individual may not have the opportunity to apply for coverage again until the open enrollment period in the Marketplace.
- Individuals should consider things such as costs, provider networks and service areas when making this decision.
Other content has been either streamlined or removed.
What Should Employers Do?
- If employers want to continue to use their old notice and simply add the new content, they are free to do so. In fact, employers may feel it is important to communicate the COBRA rules in a more detailed manner.
- In the alternative, if informing the participant is the main goal (over keeping the content of the old notices) it may be simpler to just use the new model COBRA notice and add a section directing employees to the DOL's website. Currently, the "FAQs about COBRA Continuation Health Coverage" for employees contains such detailed explanations.
- Ensure the human resources department is sufficiently prepared to answer questions, or direct questions to healthcare.gov.
Including Marketplace information in the COBRA notices could have other effects on employers, such as a positive impact on plan financials. Perhaps, if an employee leaves his job due to health concerns, he may be enticed to move to the Marketplace, if it is in fact less costly.
The DOL, Department of Health and Human Services, and Department of Treasury issued Frequently Asked Questions (FAQs). These FAQs clarify some outstanding issues, including how employers can (1) determine out-of-pocket spending for providers (including those who charge more than the reference price) and non-covered brand name prescriptions, (2) satisfy the tobacco cessation coverage requirement, and (3) compute an their maximum contribution under a Health Spending Account. Some previously-issued enforcement and transition relief was extended on certain Summary of Benefits and Coverage requirements as well. These FAQs can be found here.