Is COBRA obsolete? Should employees elect COBRA continuation or look to the Health Insurance Marketplace (Marketplace)? These questions are troubling to both employers and employees. And once deciding whether to obtain coverage through COBRA continuation or the Marketplace is made, there’s always the question of if and when a COBRA beneficiary may switch to Marketplace coverage.
The Employee Benefits Security Administration (EBSA) and the Department of Labor (DOL) issued new proposed regulations, new model COBRA notices and the Centers for Medicare and Medicaid (CMS) posted new FAQ ID 1496 explaining how COBRA coverage affects enrollment in Marketplace coverage and eligibility for premium tax credits.
Background
Generally, employers with 20 or more employees must offer COBRA for their group health plans. This entails providing written COBRA notices at the beginning of health insurance coverage and COBRA election notices upon eligibility for COBRA coverage.
In 2004 and again in 2013 the DOL issued requirements and model COBRA notices to assist employers with COBRA compliance. The 2013 model notices encompassed the Affordable Care Act (ACA) and continuation coverage available from the Marketplace. Updated model notices issued May 2, 2014 reflect that coverage is now available in the marketplace and the updated model election notice provides information on special enrollment rights in the Marketplace.
Model COBRA Notices
As with earlier models, in order to use these model notices properly, the plan administrator must complete them by filling in the blanks with the appropriate plan information. The DOL will consider use of model notices available on its web site, appropriately completed, to be good faith compliance with the notice content requirements of COBRA.
The use of model notices is not required but provided solely for the purpose of facilitating compliance with applicable notice requirements.
The model COBRA General Notice includes many references to the Marketplace including “Are there other options besides COBRA Continuation Coverage?” It suggests looking at the Marketplace, Medicaid or other group health plan options such as a spouse’s plan. It also notes that some of these options may cost less than COBRA continuation coverage. The www.healthcare.gov website is referenced to learn more.
The model COBRA Election Notice begins with information about the Marketplace and includes the healthcare website address and an 800 number to call. The notice states that Marketplace coverage may cost less than COBRA continuation coverage while devoting an entire section to other coverage options.
Details include an explanation of the Marketplace, the 60-day window from the loss of job-based coverage to enroll in the Marketplace and Marketplace open enrollment opportunities.
If beneficiaries sign up for COBRA:
- They may drop COBRA coverage and switch to Marketplace coverage during Marketplace open enrollment periods. These individuals may be eligible for premium tax credits.
- Beneficiaries may end COBRA continuation coverage early and switch to Marketplace plans if another qualifying event such as marriage or birth of a child occurs through a “special enrollment period.” These individuals may be eligible for premium tax credits.
- Once COBRA continuation coverage is exhausted and the coverage expires, COBRA beneficiaries will be eligible to enroll in Marketplace coverage through a special enrollment period even if Marketplace open enrollment has ended. They may also be eligible for premium tax credits.
- If ending COBRA without a qualifying event, there would be a waiting period until the next Marketplace open enrollment to enroll in Marketplace coverage.
If beneficiaries sign up for Marketplace coverage:
- Beneficiaries would not be eligible for COBRA continuation coverage to the extent they are outside of COBRA deadlines.
One-Time Special Enrollment Period for COBRA Eligibles and Beneficiaries
Because of the perceived confusion surrounding eligibility and enrollment in Marketplace plans, on May 2, 2014 CMS also issued a Bulletin explaining a new one-time special enrollment period for persons eligible for COBRA or current COBRA beneficiaries. Since previous COBRA notices did not adequately explain the Marketplace open enrollment period, consumers may have not received sufficient information to choose between Marketplace or COBRA coverage. Affected individuals have 60 days from the date of the CMS bulletin – July 1, 2014 – to select coverage in the Federally-facilitated Marketplace.
These individuals should contact the Marketplace call center at 800-318-2596 to activate the special enrollment period. They should reference their COBRA benefits special enrollment period.
CHIPRA
The Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) specifies that employers maintaining group health plans in a State that provides premium assistance for coverage must notify each employee of potential opportunities currently available for premium assistance in the State in which the employee resides.
Updated CHIPRA model notices, with similar updates related to Marketplace coverage, are available at:
