Administration announces proposal to clarify availability of Health Insurance Marketplace coverage to workers eligible for COBRA

On May 2, 2014, the Obama administration announced updates to model notices informing workers of their eligibility to continue health-care coverage through the Consolidated Omnibus Budget Reconciliation Act. The updates make it clear to workers that if they are eligible for COBRA continuation coverage when leaving a job, they may choose to instead purchase coverage through the Health Insurance Marketplace.

“In many cases, workers eligible for COBRA continuation coverage can save significant sums of money by instead purchasing health insurance through the Marketplace,” said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi. “COBRA continues to play an important role in helping workers and families maintain coverage after a job loss, and it is important that workers know that in some cases there is a Marketplace option as well.”

COBRA and the ACA: Compatible or Irreconcilable?

Several key provisions of the Affordable Care Act (ACA) have now been delayed. When the ACA has fully achieved lift off, what will become of COBRA?

 

The simple answer is that COBRA will continue to fly, until and unless another law permanently grounds it. Here are some observations around the interplay between the ACA and COBRA:

• The ACA likes COBRA. Parts of the ACA looked to COBRA concepts as the gold standard for calculations. Case in point is W-2 reporting of health care coverage in IRS Notice 2012-09. More recently, the DOL thought COBRA was important enough to update the Model Election Notice when it released the Exchange Notice. Click here for our article.
• The DOL likes COBRA. Look at this DOL FAQ, which states that the ACA “did not eliminate COBRA or change the COBRA rules.” making it clear that COBRA is not going away. And take a gander at this lengthy 25-year proclamation by the DOL from 2011.
• COBRA fills some ACA gaps. Granted, the Health Insurance Marketplace will provide COBRA qualified beneficiaries with some alternatives for medical coverage. In some cases, the alternatives may be cheaper, but that is not certain. Also, understand that stand-alone dental, vision, prescription drugs are not required to be offered in the marketplace. Neither are flexible benefits like HRAs and Health FSAs. COBRA offers these benefits to the extent that they are employer-sponsored coverage.
• To some extent, the marketplace likes COBRA. To some extent, the Marketplace coordinates with COBRA. For example, take your most common reason for termination of COBRA: premium non-payment. If a qualified beneficiary loses coverage because of non-payment, this person is not entitled to a special enrollment period for Marketplace coverage and must wait until the annual enrollment period. Another thing to consider is when the Marketplace opens in 2014, small employers can obtain Marketplace coverage through the Small Business Health Options Program (SHOP). This coverage would be subject to COBRA because it is employer-sponsored coverage.

 

This is COBRA’s current status: a valid law. The ACA did not change COBRA, as the DOL has pointed out.

 

COBRA and the ACA: Compatible or Irreconcilable? | Infinisource Newsroom

Health Insurance Exchange and Revised COBRA Model Election Notices Released

The Affordable Care Act (ACA) added a section to the Fair Labor Standards Act (FLSA) that said an applicable employer must provide a written notice to each existing employee no later than March 1, 2013, and to new hires beginning on that date. But on January 24, 2013, the Department of Labor (DOL) put out an FAQ that recognized that was an unrealistic deadline.

On May 8, 2013, the DOL provided an update with temporary guidance and templates of the required Exchange Model Notices (For Employers who offer a health plan and Employers who do not offer a health plan) and the Revised Model COBRA Election Notice. Starting on October 1, 2013, the notices have to be given to new employees on the day they are hired. The notices have to be given to existing employees no later than October 1, 2013.

The notices, along with further guidance, can be found at www.dol.gov/ebsa. Please review the attached Health Care Reform Hot Topic for more information on the Model Notices Explanation.

DOL Releases Guidance on Model Exchange Notice & Model COBRA Election Notice

The Department of Labor released Technical Release 2013-02 on May 8, 2013. It provided guidance for the Model Exchange Notice and the Model COBRA Election Notice. A copy of Technical Release 2013-02 follows:

I. Introduction

This Technical Release provides temporary guidance regarding the notice requirement under FLSA section 18B and announces the availability of the Model Notice to Employees of Coverage Options. This Technical Release also provides an updated model election notice for group health plans for purposes of the continuation coverage provisions under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to include additional information regarding health coverage alternatives offered through the Marketplace.