ERISA-DOL Issues Updated COBRA Notices, As Part Of Its Affordable Care Act Implementation

The U.S. Department of Labor (the “DOL”) announces that it has issued revised, updated COBRA notices in its FAQs about Affordable Care Act Implementation (Part XIX). Here is what the FAQs say:

Qualified Beneficiaries. In general, under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), an individual who was covered by a group health plan on the day before the occurrence of a qualifying event (such as a termination of employment or a reduction in hours that causes loss of coverage under the plan) may be able to elect COBRA continuation coverage upon that qualifying event. Individuals with such a right are referred to as “qualified beneficiaries”.

COBRA Notices. Under COBRA, group health plans must provide covered employees and their families with certain notices explaining their COBRA rights. A group health plan must provide each covered employee and spouse (if any) with a written notice of COBRA rights “at the time of commencement of coverage” under the plan (the “General Notice”). After a qualifying event has occurred, a group health plan must also provide qualified beneficiaries with a notice which describes their rights to COBRA continuation coverage and how to elect this coverage (the “Election Notice”).

Affordable Care Act And Other Laws. Some qualified beneficiaries may want to consider and compare health coverage alternatives to COBRA continuation coverage, such as coverage that is available through the Health Insurance Marketplace (the “Marketplace”). Qualified beneficiaries may be eligible for a premium tax credit (a tax credit to help pay for some or all of the cost of coverage in plans offered through the Marketplace) and cost-sharing reductions (amounts that lower out-of-pocket costs for deductibles, coinsurance, and copayments), and may find that Marketplace coverage is more affordable than COBRA.

The Children’s Health Insurance Program Reauthorization Act of 2009 (“CHIPRA”) specifies that an employer that maintains a group health plan in a State that provides premium assistance for the purchase of coverage under a group health plan is required to notify each employee of potential opportunities currently available for premium assistance in the State in which the employee resides.

Model Notices. The DOL has model notices that plans may use to satisfy the requirement to provide the General Notice and Election Notice under COBRA, and the notice regarding premium assistance under CHIPRA. The COBRA model Election Notice was revised on May 8, 2013 to help make qualified beneficiaries aware of other coverage options that would soon become available in the Marketplace. The DOL is now issuing a Notice of Proposed Rulemaking, as well as updated versions of the model General Notice and model Election Notice that reflect that the Marketplace is now open and that better describes special enrollment rights in Marketplace coverage. The DOL is also issuing a revised CHIPRA notice with similar updates related to Marketplace coverage.

Obtaining A Copy Of The Revised Notices. The model General Notice and model Election Notice are available on the DOL website at www.dol.gov/ebsa/cobra.html and the model CHIPRA notice is available at http://www.dol.gov/ebsa/compliance_assistance.html. (The model notices are available in modifiable, electronic form). As with the earlier model notices, in order to use the model properly, the plan administrator must complete it by filling in the blanks with the appropriate plan information.

Contemporaneous with the issuance of these FAQs, DOL is also issuing a Notice of Proposed Rulemaking to update its regulations with respect to the COBRA model notices. Until rulemaking is finalized and effective, the DOL will consider use of the model notices available on its website, appropriately completed, to constitute compliance with the notice content requirements of COBRA.

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