The Department of Labor (DOL) has amended its model notices under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). Since 1985 employers of twenty or more employees have been required to provide a temporary continuation of group health coverage to covered former-employees, which otherwise would be terminated. Under COBRA, employers are required to notify employees of their rights. Employers often disseminate such COBRA notices initially upon hiring and upon a qualifying event (i.e. termination of employment).
In a 2013 DOL release (Technical Release No. 2013-02), the DOL updated its model notices to account for the changing healthcare landscape in the wake of the Affordable Care Act (ACA). The released models focus on providing employees with information on new alternative health coverage options available through federal and state run health care exchanges.
Specifically, the DOL changed its initial notice to include:
- Information on reformed restrictions on preexisting condition exclusions;
- Information on new coverage options under the exchanges that may be available to employees who lose their group coverage; and
- Information on special enrollment options.
The most apparent revisions come to the DOL’s model election notice, which no longer focuses the characterization of COBRA benefits as the only option for terminated employees, but one of several coverage options now available. Specific changes include language that informs employees:
- That coverage under other options, including the health care exchanges may cost less than traditional COBRA coverage;
- Of the potential difficulty for an individual to switch coverage options once an initial coverage decision is made;
- Of the availability of premium tax credits and cost-sharing benefits via the exchanges;
- Of the options for switching between COBRA coverage and exchange-based coverage; and
- Of a list of factors for individuals to consider in choosing among coverage options, including premiums, cost-sharing, possible severance plan payments, provider network access and benefit service areas).
Plan administrators who have based their COBRA notification on DOL models should become familiar with the amendments and adjust accordingly.