In May 2013, the U.S. Department of Labor (“DOL”) issued a guidance and a revised model COBRA election notice in anticipation of the approaching effective date of the insurance exchanges required by the Affordable Care Act (“ACA”). Specifically, beginning on January 1, 2014, individuals and employees of small businesses will have access to coverage through a new private health insurance market known as the Health Insurance Marketplace. Open enrollment for health coverage through Marketplace began on October 1, 2013.
In some instances, employees entitled to continue coverage under their employer’s group health plan (and their beneficiaries) might want to consider obtaining coverage through the Marketplace as an alternative to COBRA coverage. Alternatively, a qualified beneficiary who is eligible for coverage under another group health plan (such as a spouse’s plan) may enroll in that plan by requesting enrollment within 30 days. The revised COBRA election notice includes this language designed to inform qualified beneficiaries of those options:
There may be other coverage options for you and your family. When key parts of the health care law take effect, you’ll be able to buy coverage through the Health Insurance Marketplace. In the Marketplace, you could be eligible for a new kind of tax credit that lowers your monthly premiums right away, and you can see what your premium, deductibles, and out-of-pocket costs will be before you make a decision to enroll. Being eligible for COBRA does not limit your eligibility for coverage for a tax credit through the Marketplace. Additionally, you may qualify for a special enrollment opportunity with another group health plan for which you are eligible (such as a spouse’s plan), even if the plan generally does not accept late enrollees, if you request enrollment within 30 days.
The 30-day special enrollment period, which pre-dates the ACA, runs from the date of the qualifying event.
The revised model notice is available on the DOL’s website at http://www.dol.gov/ebsa/cobra.html. The DOL’s brief guidance on the revised notice appears in Technical Release 2013-02, http://www.dol/ebsa/newsroom/tr13-02. The ACA’s special enrollment regulations can be found at 45 C.F.R. § 147.104.
All employers should be aware of these changes, even those who out-source COBRA administration. The availability of alternative sources of coverage to COBRA can potentially result in substantial cost savings for group health plans and participants alike. In addition, employers should be prepared for situations in which an employee’s spouse loses coverage under the spouse’s employer’s plan and seeks to enroll in the plan sponsored by the employee’s employer.