COBRA: Action needed now

On May 7, 2014, the U.S. Department of Labor (DOL) issued proposed rules with amendments to the notice requirements under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). The proposed amendments are intended to align the COBRA notice requirements with the Affordable Care Act (ACA) so that individuals who lose coverage under their employer’s plan understand that they have the option to either (a) purchase COBRA coverage; or (b) purchase coverage through the new ACA Health Insurance Marketplace, which may be more affordable than COBRA coverage. The proposed rules were accompanied by a new model election notice and general notice that employers may use to satisfy their COBRA notice obligations. (A new model Children’s Health Insurance Program notice was also issued.)

A few days before the DOL issued its proposed rules, the Department of Health and Human Services (HHS) also issued a new bulletin regarding COBRA. HHS is concerned that former model COBRA notices did not sufficiently explain the Marketplace options to persons eligible for COBRA. Thus, HHS is giving current COBRA-eligible individuals a one-time special period — through July 1, 2014 — to enroll in a qualified health plan through the Marketplace.

Right now, employers should, at a minimum: (1) update their COBRA general and election notices to include the new model language regarding Marketplace coverage; (2) notify current COBRA eligible individuals regarding their special, one-time right to enroll in Marketplace coverage through July 1, 2014; (3) review and revise their health plan’s COBRA communications, policies and procedures to include the availability of coverage in the Marketplace; and (4) update current plan’s summary plan description to include the option of Marketplace coverage.

Self-funded employers likely need health plan identifier

Most employers who sponsor self-funded group health plans will likely need to obtain a health plan identifier (HPID) for their plan by November 5, 2014.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires medical providers, health insurers, group health plans, third party administrators (TPA), and other parties involved in HIPAA “standard transactions” to use standard identifiers to identify themselves, and also to use standard formats and codes for the electronic data being exchanged in a “standard transaction,” such as a medical claim.

The purpose of requiring standard identifiers, formats and codes is to increase the efficiency and accuracy of transactions. Currently, health plans are identified in transactions using various identifiers that differ in length and format. The HPID is a 10-digit identifier that will be unique for each health plan, but will be in the same format.

Although TPAs almost always conduct HIPAA standard transactions on behalf of the self-funded plans they administer, the plans themselves are also now required to obtain HPIDs. Additionally, group health plans must disclose their HPID when requested. (Fully insured employers do not need to obtain a HPID because they do not qualify as a “health plan” under these rules. HHS has stated the insurer must obtain the HPID for the fully insured plan.)

Most employers who sponsor self-funded health plans will need to obtain a HPID by November 5, 2014. Employers should look to their consultant and/or their TPA for help obtaining an HPID.