The Department of Labor has issued revised model COBRA notices that explain the alternative coverage that may be available to COBRA-eligible individuals under the government-sponsored health insurance exchanges established pursuant to the Affordable Care Act (ACA), otherwise known as health care reform.

The model general COBRA notice (provided when a covered individual first enrolls in the plan) has been revised to include two new paragraphs indicating that a COBRA-eligible individual may be able to elect coverage under a government-sponsored health insurance exchange in lieu of electing COBRA continuation coverage and that the cost of such coverage may be cheaper than COBRA continuation coverage.

The model COBRA election notice (provided when a COBRA qualifying event occurs) has been revised to include the following information:

  • A general summary of the coverage option under the government-sponsored health insurance exchanges;
  • A statement that coverage under the government-sponsored health insurance exchanges may be cheaper than COBRA continuation coverage;
  • The link to the federal website that provides additional information about the government-sponsored health insurance exchanges;
  • Factors to consider when choosing between COBRA continuation coverage and coverage under a government-sponsored health insurance exchange; and
  • Rules for switching between COBRA continuation coverage and coverage under a governmental-sponsored health insurance exchange including the prohibition against a mid-year election of coverage under a health insurance exchange if COBRA continuation coverage terminates early (e.g., for failure to pay premiums).

Employers are not required to use the revised model COBRA notices. However, the model notices are deemed to be good faith compliant with the disclosure requirements under COBRA.

Employers should either begin using the revised model COBRA notices or review and revise their customized COBRA notices to reflect the changes in the revised model documents.

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.