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New Updates To COBRA Notices Include Affordable Care Act Information

Authored by attorney Jay Rixey

The U.S. Employee Benefits Security Administration recently announced updates to its model notices informing employees of their eligibility to continue health care coverage at the end of their employment through the Consolidated Omnibus Budget Reconciliation Act (COBRA).  The purpose of the changes is to include information related to the Affordable Care Act and to inform employees who are eligible for COBRA continuation coverage of their option to instead purchase coverage from the Health Insurance Marketplace.

In general, employees and their families who are eligible for employer-sponsored coverage must be informed of their right to COBRA continuation coverage at the beginning of their employment, and must also be informed of their right to purchase COBRA coverage at the end of their employment.  The new changes, announced by the U.S. Employee Benefits Security Administration on May 2, 2014, offer additional information to employees that more affordable options may be available through the Health Insurance Marketplace, where employees and their families may be eligible for financial assistance that is not otherwise available for COBRA continuation coverage.  In addition to informing employees about the availability and advantages of coverage through the Health Insurance Marketplace, the changes also point out several factors that employees should consider in deciding between coverage options.

 “In many cases, workers eligible for COBRA continuation coverage can save significant sums of money by instead purchasing health insurance through the Marketplace,” according to Assistant Secretary of Labor for Employee Benefits Security, Phyllis C. Borzi.  Coverage through the Health Insurance Marketplace may be less expensive than COBRA continuation coverage, and is also available indefinitely (unlike COBRA coverage which has a limited duration). In the majority of cases, employees and their families who are eligible for, but not enrolled in, COBRA continuation coverage will instead be able to obtain coverage from the Health Insurance Marketplace outside of the normal open enrollment period. 

The updated model notices are available on the U.S. Department of Labor website at http://www.dol.gov/ebsa/modelgeneralnotice.doc.

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