Guide to changing COBRA rules: new COBRA model notice

This is the third in a 3-part series entitled “Is COBRA dead?” Previous posts can be found here and here.

The Health affairs blog recently broke news on two critical announcements from the Employer Benefits Services Administration (EBSA) around changing COBRA rules.

First, EBSA created a very-special “special enrollment period” for people on COBRA, giving them until July 1st, 2014 to switch to a marketplace plan. The goal here was to provide people a second chance to enroll, since many were likely confused about their options. Second, EBSA changed the recommended language in COBRA notices (which are required by law) to more clearly promote the significantly cheaper options on the exchange.

While these changes will certainly help mitigate confusion, they will not entirely protect unknowing employees from falling into the COBRA trap. As Health Affairs pointed out, even with the proposed rule changes, individuals on COBRA “[cannot] move from COBRA coverage to marketplace coverage at any time, and will “need to wait for an open enrollment period” to access subsidy-eligible plans.

Below are a few excerpts from the recommended model notice that begin to warn unsuspecting employees of the COBRA trap:

“You may be able to get coverage through the Health Insurance Marketplace that costs less than COBRA continuation coverage. You can learn more about the Marketplace below…”

“When you lose job-based health coverage, it’s important that you choose carefully between COBRA continuation coverage and other coverage options, because once you’ve made your choice, it can be difficult or impossible to switch to another coverage option.”

Screenshot of COBRA model notice


In our next series of blogs, we’ll review implications of COBRA’s recent changes from the employers’ perspective.

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