Affordable Care Act: Required COBRA Notices

All employers should be aware that the Affordable Care Act (ACA) requires a change to the traditional COBRA notifications. Simply put, there are additions to the employee notifications which alert beneficiaries that they now have the option of participating in the "Marketplace."

One of the key aspects of the ACA is the creation of federal and state insurance exchanges. These are administrative constructs which enable individuals to buy health insurance from private insurance companies by taking advantage of the collective numbers of those purchasing the insurance through the exchange. The exchanges are referred to as the "Marketplace."
COBRA requires that an individual who is covered by a group health plan (a "beneficiary") on the day prior to a "qualifying event" (such as a termination of employment or reduction in hours which results in loss of coverage) must be given notification of the right to continuing coverage. This notification and a corresponding election notice must be provided to the beneficiaries within 14 days after the plan administrator receives notification of the qualifying event.
In addition to informing beneficiaries that there are new options available via the Marketplace, the COBRA notice must also inform the reader that persons using the Marketplace may be eligible for a premium tax credit. Additional information that must be contained in the election notice is as follows:

  • The name of the plan and the name, address, and telephone number of the plan’s COBRA administrator;
  • Identification of the qualifying event;
  • Identification of the qualified beneficiaries (by name or by status);
  • An explanation of the qualified beneficiaries’ right to elect continuing coverage;
  • The date coverage will terminate (or has terminated) if coverage is not elected;
  • How to elect continuing coverage;
  • What will happen if coverage is not elected, or is waived;
  • What continuing coverage is available, for how long, and (if it is for less than 36 months), how it can be extended for disability or second qualifying events
  • How continuing coverage might terminate early;
  • Premium payment requirements, including due dates and grace periods
  • A statement of the importance of keeping the plan administrator informed of the address of qualified beneficiaries; and
  • A statement that the election notice does not fully describe COBRA or the plan and that more information is available from the plan administrator and in the plan’s summary plan description (SPD)

Model election forms, as well as additional information regarding COBRA, are located at http://www.dol.gov/ebsa/cobra.html. Since the 18 month minimum COBRA period will extend into 2014 (when insurance through the Marketplace will be available), employers should begin to use the new forms as soon as possible.