Health Care Continuation Coverage and Special Marketplace Enrollment Periods

Joy Johnson Wilson 5/5/2014

COBRA Health-Care Coverage 

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances, such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.

Insurance PapersCOBRA generally requires that group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end. COBRA outlines how employees and family members may elect continuation coverage. It also requires employers and plans to provide notice.

On May 2, 2014, the Obama administration announced updates to model notices informing workers of their eligibility to continue health-care coverage through COBRA. The updates make it clear to workers that if they are eligible for COBRA continuation coverage when leaving a job, they may choose to instead purchase coverage through the Health Insurance Marketplace. In addition, the Departments of Labor (DOL), Health and Human Services (HHS), and Treasury have released another set of FAQs regarding implementation of various provisions of the Affordable Care. Topics include: Summary of Benefits and Coverage; COBRA notices; out of pocket maximums; tobacco cessation; and excepted benefits, among others. The Tri-Agency frequently asked questions (FAQs) are available here.

New Special Enrollment Periods (SEPs) and Hardship Exemptions

The Center for Consumer Information and Insurance Oversight (CCIIO) has posted a bulletin on “Special Enrollment Periods (SEPs) and Hardship Exemptions for Persons Meeting Certain Criteria.” The bulletin provides guidance on three types of SEPs in the Federally Facilitated Marketplaces (FFM). The SEPs are for:  (1) Individuals eligible for or enrolled in COBRA; (2) Individuals whose individual market plans are renewing outside of open enrollment; and (3) for AmeriCorps/VISTA/National Civilian Community Corps members, which also includes provisions for a “hardship exemption.” An additional hardship exemption applies to people who obtained coverage that was effective as of May 1, 2014. For additional detail on the SEPs and exemptions, the bulletin is available here.

Workers and their families who are eligible for employer-sponsored coverage generally must be informed of their right to COBRA continuation coverage at the start of employment. They must also be informed of their right to purchase COBRA coverage when separating from a job. The proposed changes to the model notices would offer information on more affordable options available through the marketplace, where workers and families may be eligible for financial assistance that would not otherwise be available for COBRA continuation coverage. In most cases, workers and their families eligible for, but not enrolled in, COBRA continuation coverage would be able to enroll in marketplace coverage outside of the normal open enrollment period. 

DOL, HHS, and Treasury have published FAQs related to the proposed changes to model notices. The FAQs are posted on the DOL website here and the HHS website here. The updated model notices are posted on the DOL website here and here. A related notice of proposed rulemaking on the COBRA notice requirements will be published in the May 7 edition of the Federal Register. The notice of proposed rulemaking can also be viewed here.

Additional Department of Labor Resources

Joy Johnson Wilson is federal affairs counsel and Health & Human Services policy director at the National Conference of State Legislatures (NCSL).  As director of  Health & Human Services Policy, she designs and implements the lobbying strategy for the conference on health and human services issues. She has been with NCSL since 1978.