New FAQs Address Effect of Affordable Care Act on COBRA and Other Matters

Ballard Spahr LLP

In a wide-ranging set of frequently asked questions (FAQs) and other guidance, the U.S. Departments of Labor, Treasury, and Health and Human Services have addressed a number of issues pertaining to the Affordable Care Act (ACA). They include issues pertaining to COBRA and the Children’s Health Insurance Program Reauthorization Act (CHIPRA), annual cost-sharing limits, preventive care, health flexible spending arrangements (health FSAs), and summaries of benefits and coverage.


To better coordinate the coverage and subsidies available through the Health Insurance Marketplace (often referred to as the health insurance exchanges) with the continuation of health coverage available through COBRA and the premium assistance available under CHIPRA, the three agencies have issued an FAQ. In addition, the Department of Labor has issued proposed regulations and new model notices under COBRA (affecting the general COBRA notice as well as the election notice) and CHIPRA. This guidance aims to provide individuals with more information about their options for health coverage and the attendant costs. The government has also announced a special enrollment period, lasting until July 1, 2014, for current COBRA participants to sign up for Marketplace coverage.

Cost-Sharing Limits

The ACA limits the out-of-pocket expenses that a participant in a non-grandfathered health plan may incur in a year. The FAQs address how plans may, if they choose, count certain costs as an out-of-pocket expense for these purposes. These costs include balance billing (for amounts above the usual and customary charge) by an out-of-network provider and the cost of a brand-name prescription drug when a medically appropriate generic drug is available.

Preventive Care

The FAQs include a safe harbor for the coverage that a non-grandfathered plan must provide without cost-sharing for tobacco prevention products and services.

Health FSAs

The FAQs provide that health FSA carry-forwards will not affect a health FSA's exception from ACA requirements.

Summaries of Benefits and Coverage

The FAQs provide that certain basic forms and safe harbors applicable to the uniform summaries of benefits and coverage required under the ACA will continue in effect.


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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