COBRA CONUNDRUMS reprinted from the July, 2013 issue of Health Insurance Underwriter Magazine featuring our very own Robert Meyers.
Dear COBRA Bob-
I have a 35-employee group that is subject to COBRA, but not subject to the PPACA. In May, the Department of Labor (DOL) issued some guidance that included a “Notice to Employees of Exchange Coverage Options” and an “Updated Model Election Notice under COBRA.” I am so confused, I can’t see straight! Are these notices connected? Do both of these notices apply to this group? Who is responsible for sending them out?
-Bewildered in Boston
First, allow me to clarify a few points raised by your question:
- You describe the group as subject to COBRA but not subject to PPACA. We are ALL subject to PPACA, so I assume what you meant to say is that PPACA pay or play penalties would not apply to this group because they have fewer than 50 employees.
- The new notice provision applies to all employers who are subject to the Fair Labor Standards Act. It includes timelines, so all groups (regardless of pay or play status) need to be ready to go by Oct. 1 when the exchanges open for enrollment, for coverage effective Jan. 1. 2014.
- These notices are not connected, but both are required to notify employees of coverage available to them when newly hired, or upon experiencing a COBRA event. Each notice has a specific purpose as outlined below.
Next, let’s look at the new notice requirements:
- The “Notice to Employees of Exchange Coverage Options” is required to inform employees of coverage options available through the marketplace (as required under FLSA). This notice should be supplied by the employer, in coordination with the health insurer, as it includes representations required to evaluate the employer’s plan as it compares to the health care plans in the marketplace exchange. Beginning Oct. 1, 2013, new employees must receive this notice when hired by groups of ALL sizes. The only distinction is whether the group has an employer-sponsored plan or not. There is a notice for either situation. For 2014, the DOL will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee's start date. Existing employees must receive notice no later than Oct. 1, 2013. A model notice (for employers sponsoring a plan) can be found at http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf, and a model notice (for employers NOT sponsoring a plan) can be found at http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf.
- The new “Updated Model Election Notice under COBRA” must be ready by Jan. 1, 2014. The recent guidance provided an updated model election notice for group health plans for purposes of the continuation coverage provisions under COBRA, which includes additional information regarding health coverage alternatives offered through the Marketplace. This notice is a modification of the COBRA election notice and includes language informing those who have experienced a COBRA qualifying event that in addition to plan continuation through COBRA, there are other ways to obtain coverage now available to them through the marketplace or health exchange. A sample of this notice (modelelectionnotice.doc) is also available at the Department of Labor website.
I hope this information is helpful to you, and that the administration and timing of each notice is clearer. We are all in a time crunch to implement changes, but I know we can work through the chaos because we always do.
Do your best,
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