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Updated COBRA Notices Provide Information About Obamacare Options

[June 9, 2014]  On May 2, 2014, the Department of Labor (“DOL”) released proposed regulations containing new model notices pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”).  The new notices inform workers that they may purchase coverage through the health insurance exchanges established pursuant to the Affordable Care Act (“ACA”) and that such coverage may be less expensive than COBRA continuation coverage.

In general, administrators for group health plans must issue two types of notices pursuant to COBRA:  1) a “general” notice when a participant initially becomes covered under the plan; and 2) an “election” notice when a participant experiences a COBRA qualifying event.  The new regulations revise both the model general notice and the model election notice by including information about the ACA.

The model general notice instructs employees that health coverage may be more affordable when purchased through an ACA exchange, and it directs them to the ACA health exchange website.  The model election notice contains detailed information, through a question and answer format, about the ACA, including where and when to enroll in coverage, whether an employee can switch between COBRA and ACA coverage, and factors to consider when choosing coverage, including severance provisions, access to current providers, and prescription coverage.

Even though the open enrollment period for ACA coverage has closed, people with COBRA insurance have a special enrollment period to obtain coverage through the federal ACA exchange:  they may enroll by July 1, 2014.  The Department of Health and Human Services established the special enrollment period because the former model COBRA notices did not sufficiently address ACA options.

Although plan administrators are not required to use the model notices, such use is considered good faith compliance with the notice requirements of COBRA.  Thus, we advise using the updated models immediately.