Have you Checked Your COBRA Notices Recently?

As many employers are discovering, the Affordable Care Act (aka Obamacare) puts many new requirements on employers. One new requirement that you might have overlooked, however, has to do with COBRA notices. Employers with 20 or more employees are required to notify employees and anyone else covered under their health insurance plans within 45 days of a qualifying event (i.e. loss of job, reduction in hours, divorce, loss of dependent child status) of their eligibility for COBRA benefits.

What many employers don’t know, however, is that the ACA changed what must be included in this notice. The ACA now requires COBRA notices to state that those who qualify for COBRA also have the option to purchase coverage on state or federal exchanges, and that coverage on these exchanges may be cheaper than through COBRA. The Department of Labor issued two revised model COBRA notices to help employers comply with these requirements.

The Model General COBRA Notice includes new instructions for administrators, as well as information explaining coverage options available under the exchanges and other special enrollment options. The Model COBRA Election Notice provides a statement that coverage under the exchanges may cost less than COBRA coverage and that it may be difficult to switch to another coverage option once a coverage decision has been made. It also clarifies how exchanges provide an alternative to COBRA.

If an employer’s COBRA notice does not comply with these updated ACA requirements, it may be subject to increased federal taxes. Therefore, it is a good idea to review your COBRA notices sooner rather than later.

For more information on what an employer must do to ensure that their COBRA notices comply with federal law, contact Margaret Kostopulos, Darcy Proctor, or Matt DiCianni.