United States: New Model COBRA Notices Issued By DOL

COBRA Requirements. 

Under COBRA, an individual who is covered by a group health plan may be able to elect COBRA continuation coverage upon a qualifying event, such as termination of employment or reduction in hours that causes a loss of coverage under the plan.  Individuals who have a qualifying event are referred to as "qualified beneficiaries."  The administrator of a group health plan must provide qualified beneficiaries with a general notice when an individual first becomes covered under the plan and an election notice when an individual experiences a qualifying event. The election notice describes the qualified beneficiary's rights to continuation coverage and how to elect coverage.  The election notice must be provided to the qualified beneficiaries within 14 days after the administrator receives notice of the qualifying event.

Revised Model Notices. 

The model COBRA notices have been revised to discuss the Marketplace health coverage alternatives which for some individuals may be better suited for them than electing COBRA continuation coverage.  The revised election notice describes the potential advantages of electing Marketplace coverage instead of COBRA coverage, such as the availability of federal tax credits (depending on income) to help pay premiums for Marketplace coverage.  The revised election notice also discusses the limited opportunities to change from COBRA coverage to Marketplace coverage. While Marketplace coverage is available when an individual experiences a qualifying event, an individual who elects COBRA coverage may switch to Marketplace coverage only when that COBRA coverage is exhausted (e.g., at the end of the 18- or 36-month period of coverage), during an annual Marketplace enrollment period, or if they experience a special enrollment event, such as marriage or birth of a child.

Copies of the revised model COBRA notices are available on the DOL's website at www.dol.gov/ebsa/cobra.html. While administrators are free to use their own form of notices to comply with their obligations under COBRA, use of the model notice, which can be tailored to address specific plan provisions, will constitute compliance with the notification requirements.

What to do now? 

Administrators of group health plans should update their current COBRA notices to reflect information about the Marketplace.  If an administrator was previously using a prior version of the model COBRA notices, the notices should be updated to reflect the newly revised model notices. Employers that have outsourced their COBRA administration should coordinate with their third party administrators to ensure that the notices are being properly revised.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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