New Rules Would Amend COBRA Notification Requirements To Include ACA Alternatives

by Akerman LLP - HR Defense
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The U.S. Department of Labor ("DOL") has proposed new rules that would revise an employer’s notification requirements under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") to align them with Affordable Care Act ("ACA") provisions already in effect.  

Under COBRA, group health plans must provide a general notice of COBRA rights to each covered employee and spouse at the time of commencement of coverage under the plan.  In addition, group health plans must provide qualified beneficiaries with an election notice at the time of certain qualifying events, such as termination of employment or reduction in hours that causes loss of coverage under the plan.  The election notice describes a qualified beneficiary’s rights to continuation coverage and how to make an election.  The election notice must be provided to the qualified beneficiaries within 14 days after the plan administrator receives the notice of a qualifying event.  

The DOL had previously issued a model general notice and a model election notice that were available for download on DOL's website.

On May 8, 2013, the DOL issued technical guidance which explained that some qualified beneficiaries may want to consider and compare health coverage alternatives to COBRA continuation coverage that are available under the ACA through a private health insurance market – the Health Insurance Marketplace ("the Marketplace").  The DOL also noted that some qualified beneficiaries may also be eligible for a premium tax credit to help pay for some or all of the cost of coverage in plans offered through the Marketplace.

The proposed regulations issued on May 1, 2014 eliminate the older version of the model general notice and the model election notice and permit the Department to amend the model notices as necessary and provide the most current versions of the model notices on its website.  While use of the new model notices is not required, using them will ensure compliance with COBRA notice requirements, at least until the new rules are finalized.  The proposed rules note that "[u]ntil rulemaking is finalized and effective, the Department of Labor will consider use of the model notices available on its website, appropriately completed, to be good faith compliance with the notice content requirements of COBRA."

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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