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ObamaCare FAQ of the Month: How will the updated COBRA notices affect employer-sponsored health insurance?

May 2014

By: Peter E. Hansen, Esq.

On May 2, 2014, the Department of Labor posted two updated COBRA notices: a general notice, distributed upon initial eligibility; and an election notice, distributed upon the occurrence of a qualifying event, such as termination of employment. Significantly, both notices now explicitly reference coverage through a state Health Insurance Marketplace as an alternative to COBRA continuation coverage. The model notices, available at http://www.dol.gov/ebsa/cobra.html, are currently available only in English, but Spanish language versions will soon be available.

So, how does this affect your business? To some extent, it appears as though the Department of Labor is trying to erode the existing COBRA model - in fact, Obamacare already took steps towards this by prohibiting pre-existing condition exclusions, thereby eliminating one of COBRA's key benefits to employees who would otherwise be without insurance to cover a pre-existing condition. On the other hand, the Department of Labor also released a FAQ covering COBRA distribution regulations, available at http://www.dol.gov/ebsa/faqs/faq-aca19.html, which suggests that COBRA is not going away (at least, not yet). Ultimately, it seems likely that although COBRA enrollment will continue to decline, many employers will remain subject to COBRA for the foreseeable future.

Questions? Suggestion for a future Obamacare FAQ of the Month? Please contact WS Attorney Peter E. Hansen at (262) 560-9696, or email pehansen@wesselssherman.com .