The Department of Labor (DOL) recently put together some FAQs related to the Affordable Care Act, along with offering new model COBRA notices. The Feds changed the COBRA general notice, which is provided when someone is initially covered, and the COBRA election notice, which is given to participants who experience a COBRA-qualifying event.
The news about the updated COBRA notices affects most employers that sponsor a group health plan and have 20 or more employees. These COBRA documents are critical to compliance.
[Note: While employers with fewer than 20 employees are not subject to COBRA, other laws, such as state insurance laws, may require these small employers to offer continuation coverage similar to COBRA.]
As with the earlier model notices, to use the COBRA models properly, the plan administrator must complete them by filling in blanks with the appropriate plan information, as well as editing specific text. Generally, the areas of customization have italicized text in each of the model notices. Heads up to employers: The first page of each notice is an instruction page to the employer and is not intended for employees.
What's New in the COBRA Notices
The revisions provide more detailed information about the federally facilitated marketplace (FFM) — the federal exchanges for health care created by the Affordable Care Act (aka Obamacare) — being an alternative to COBRA. It is mentioned briefly in the initial COBRA general notice and covered extensively in the COBRA election notice, including a section that discusses what an employee should consider when deciding between COBRA and the FFM — premiums, networks, formularies, severance payments, service areas, and other cost sharing.
The election notice further specifies that the federal marketplace is an alternative to COBRA, but once individuals elect COBRA, they will not get another special enrollment period for the FFM until after they've exhausted their COBRA coverage. An exception to this rule about another special enrollment period for the exchange would be if an employee experiences a second qualifying event while on COBRA.
Let's be honest: This rule about generally exhausting COBRA coverage (if elected) before having a second enrollment period on the federal marketplace coverage is confusing. Because it's tricky, the Centers for Medicare and Medicaid Services, which manages requirements for COBRA, is giving people currently on COBRA a one-time window to move to the exchang even if they haven't exhausted COBRA.
This window for the switch closes July 1, 2014, and individuals can make the change by calling 1-800-318-2596. Employers who sponsor health plans should consider notifying current COBRA enrollees about this deadline. Click here to discover more details about this special enrollment window.
Updates to Annual CHIP Notice, Too
In addition to the new model COBRA notices, the Labor Department also released a new CHIP notice. Employers that maintain a group health plan for employees in a state that provides premium assistance for health care under Medicaid or CHIP (Children's Health Insurance Program) must notify all employees that reside in a state with a CHIP of potential opportunities for premium assistance in the state in which the employees reside. This CHIP notice must be provided annually.
In addition to revised model notices, the FAQ provides some clarification about the Affordable Care Act in the following areas:
- How ACA cost-sharing limitations apply to out-of-network “balance billing” for plans that count out-of-network expense toward the out-of-pocket maximum
- How ACA out-of-pocket maximum limitations apply to brand-name prescription drugs with medically appropriate generic equivalents
- How ACA out-of-pocket maximum limitations apply to plans that utilize reference pricing
- Guidelines for preventive services, including specific details on tobacco cessation
- How the Health FSA Excepted Benefit criteria works with the new Health FSA Carryover provision.
How are you staying on top of compliance news? Please your tips share in comments!
DISCLAIMER: We hope this blog post gave you an "Aha!" moment, but please don't hold it as legal or tax advice. This information is general in nature, and your specific situation deserves attention from a dedicated legal or tax advisor.