The Affordable Care Act has impacted many areas of health insurance. One area that has been impacted is COBRA. The Department of Labor (DOL) has posted a series of FAQs on its website concerning the interplay between ACA and COBRA. DOL has also posted a new model general COBRA notice and a new model election COBRA notice. The use of these model notices will be considered good faith compliance with the notice contents requirements of COBRA. It should be noted that these model notices may need to be customized to be consistent with existing administrative policies. Employers that have outsourced their COBRA administration will have to coordinate with the third party administrator to ensure compliance with the new model forms.
The most important factor to be considered by DOL’s action is that the model forms discuss the availability of coverage through the ACA marketplace, and may direct potential COBRA beneficiaries away from COBRA and into potentially less expensive options available through the marketplace. For employers who want to have fewer COBRA beneficiaries, the new notice is a way to encourage and educate all plan participants about non-COBRA options. For employees, it is important to understand that COBRA coverage usually provides coverage retroactive to the date that coverage as an active participant ceased, while ACA coverage may be prospective only.
Practice pointer. Once again, the impact on COBRA by the ACA makes it a good time for employers to review and revise their employee handbooks, policies and procedures and summary plan descriptions.