DOL Issues New COBRA Model Notice

There is significant confusion for Medicare-eligible individuals who are worrying about whether they enroll in Medicare or stay on their employer’s plan. Additionally, when terminating employment, individuals face the decision between continuation of their employer’s health plan, under COBRA, or enrolling in Medicare. The new release of FAQs and a new COBRA notice seek to put an end to that confusion.

Background

Employees enrolled in their employer’s group health plan at the time of a qualifying event, e.g. termination of employment or reduction in hours causing a loss of coverage) have the right to continue their employer’s health plan coverage under COBRA regulations. Health plans must provide all employees, participating in their health plan, with a notice of their COBRA rights and then provide appropriate COBRA election forms to any employees that exercise their right to continue that coverage.

Many individuals are unclear of the health care coverage choices they have when they lose their employer’s group health coverage. These individuals should carefully weigh which option is best. These include:

• Continuation of the employer’s health plan at 102% of the total cost of the coverage;
• Enrolling in individual coverage in the Exchange where they may qualify for a premium subsidy; or
• Medicare, if eligible

There are implications if individuals do not enroll in Medicare on time so this is an area that requires specific attention. Learn more about when individuals should enroll in Medicare.

Interaction between Medicare and COBRA

To help further the understanding of these choices, the DOL issues this new model notice that helps to provide guidance individuals who face these coverage choices. This new notice now addresses the question of whether an individual can choose Medicare coverage rather than COBRA.

It confirms that individuals who chose not enroll in Medicare when first eligible, due to existing coverage under the employer’s group health plan, have an 8-month window to enroll in Medicare Parts A and B without suffering any late enrollment penalties. It further warns that, if the individual elects COBRA and misses this 8-month window, they will pay higher Medicare premiums when they do enroll.

Employers may begin using these notices immediately.

For more information on evolving compliance regulations the wake of the COVID-19 pandemic, visit our OneDigital Coronavirus Advisory Hub, or reach out to your local OneDigital advisory team.