DOL Updates COBRA Model Notices, Adds Information on Interaction with Medicare

On May 1, 2020, the Department of Labor (DOL)’s Employee Benefits Security Administration (EBSA) revised its model COBRA notices, and accompanying FAQs, to provide information on the interactions between Medicare and the Consolidated Omnibus Budget Reconciliation Act (COBRA). In the news release regarding these updates, the DOL states the updated notices will help individuals affected by COVID-19 avoid unnecessary health care costs and help them make informed decisions regarding their healthcare coverage.

Under COBRA, group health plans must provide plan participants and beneficiaries certain notices explaining their rights under COBRA. In general, plans are required to send a general notice to participants upon initial enrollment in a group health plan explaining their right to continue coverage under the plan upon the occurrence of a “qualifying event,” which include, but not limited to, termination of a covered employee’s employment, reduction in the hours of employment that causes loss of coverage under the plan, or divorce from the covered employee.

After the plan has been notified that a qualifying event has occurred, it must provide an election notice to qualified beneficiaries (i.e., an individual who was covered by a group health plan on the day before the occurrence of a qualifying event) describing how to make an election of continued coverage under the plan.

The updated notices now include information to address how qualified beneficiaries may enroll in Medicare before, or instead of, electing COBRA when coverage ends under the plan. Below are some examples of these interactions:

• If an individual doesn’t enroll in Medicare Part A or B when they first become eligible because they were still employed, they have a 8-month Medicare special enrollment period beginning with the earlier of the month employment ends or the month after the plan’s coverage based on current employment ends.
• If continued coverage under COBRA is elected first, but later an individual decides he or she wants to enroll in Medicare Part B, they may have to pay penalty for late enrollment and experience a gap in coverage.
• An individual who elects COBRA coverage and later enrolls in Medicare while COBRA is still in effect may have their COBRA coverage terminated.
• If an individual is enrolled in both Medicare and COBRA, Medicare will generally be the primary payer and COBRA continuation coverage will pay second.

Although it’s not mandatory for plans to use these model notices, the DOL considers them to be compliant with COBRA’s notice content requirements. To learn more about COBRA and the updated notices, check out your ComplianceDashboard task!

The information and content contained in this blog post are for general information purposes only, and does not, and is not intended to, constitute legal advice.