AFFORDABLE CARE ACT SWITCHING FROM COBRA TO MARKETPLACE COVERAGE – ANOTHER OPPORTUNITY
The first open enrollment period for obtaining health coverage through the ACA’s Health Insurance Marketplace ended on March 31, 2014. That means that individuals without coverage can no longer obtain private coverage through the Marketplace for 2014 unless they are eligible for special enrollment by virtue of having a “qualifying life event.” Qualifying events for purposes of COBRA are also “qualifying life events” under the Marketplace rules. So, for example, a participant in an employer-sponsored group health plan who loses coverage under the plan due to termination of employment (other than for gross misconduct) is eligible for COBRA coverage or may purchase Marketplace coverage in lieu of COBRA. This “special enrollment event” for Marketplace coverage is available for 60 days from the time coverage under the employer’s group health plan ends.
Having elected COBRA coverage, however, the individual may not simply drop that coverage and switch to Marketplace coverage at any time. Enrollment in the Marketplace is permitted upon expiration of COBRA coverage or within 60 days of experiencing another Marketplace special enrollment event, such as marriage or childbirth. In addition, anyone, including those enrolled in COBRA, may purchase coverage in the Marketplace during the annual open enrollment period. The next such period is scheduled to begin on November 15, 2014.
On May 2, 2014, the Department of Health and Human Services (“HHS”) Center for Medicare & Medicaid Services announced an additional special enrollment right for COBRA beneficiaries. For a period of 60 days from the date of the announcement (or until July 1, 2014), COBRA beneficiaries may switch to Marketplace coverage. Individuals wishing to consider this option are advised to contact the Marketplace call center at 1-800-318-2596. They should inform the Marketplace call center that they are calling about their COBRA benefits and the Marketplace. If it is determined that they are eligible for the special enrollment period, consumers can then explore their options for Marketplace coverage and assess whether such coverage is preferable to COBRA.
To reinforce the availability of Marketplace coverage in lieu of COBRA, the Department of Labor (“DOL”) has proposed revisions to its model COBRA notices. Last year, the DOL revised the model “election notice” – the notice required when an individual experiences a COBRA qualifying event – to include information about Marketplace eligibility. This time, both the election notice and the “general notice” – required when an individual first becomes covered under the plan – are affected. The proposed general notice briefly describes the Marketplace option; the proposed election notice provides considerably more information on the subject. Neither of the model notices mentions the new 60-day special enrollment period, which is being offered on a one-time basis. The revised model COBRA notices were issued in connection with promulgation of proposed rules and may be tweaked before they are issued in final form. In the meantime, use of the model notices as proposed constitutes good faith compliance.
As we pointed out last fall (“Model COBRA Election Notice Revised to Reflect ACA Provisions”), the availability of alternative sources of coverage to COBRA can result in substantial cost savings for group health plans and participants alike. Plan sponsors are not required to notify current COBRA beneficiaries of the 60-day special enrollment period but may wish to do so in order to make affected individuals aware of the opportunity.
The HHS bulletin describing the 60-day COBRA-Marketplace special enrollment right can be accessed through a link on the DOL’s website at www.dol.gov/ebsa/healthreform/consumer.html. The proposed model COBRA notices are available at www.dol.gov/ebsa/cobra.html.