DOL Clarifies How COBRA and Marketplace Coverage Interact

The Affordable Care Act (ACA) has changed many aspects of today’s insurance world including COBRA Administration. Earlier this month, the Department of Labor (DOL) and Centers for Medicare & Medicaid Services (CMS) issued notices clarifying how COBRA and Marketplace coverage interact specifically:

• When a COBRA participant’s coverage expires naturally (the participant has used their full 18 or 36 months of coverage), the participant will be eligible to enroll in Marketplace coverage through a special enrollment period, even if Marketplace open enrollment has ended.

• If the COBRA participant ends COBRA continuation coverage early, they will have to wait to enroll in Marketplace coverage until they have a qualifying event or the next open enrollment period.

To support this clarification, the DOL has issued an updated model COBRA election notice with new suggested wording covering how COBRA and Marketplace coverage interact. Due to the lack of previous clarification, CMS has opened a special enrollment period (ending 7/1/2014) for COBRA participants to obtain Marketplace coverage. CMS advised participants to contact the Marketplace call center at 1-800-318-2596 if they are interested in activating their special enrollment period.

These clarifications are in addition to previous notices indicating:

• Being eligible for COBRA does not limit eligibility for coverage or for a tax credit through the Marketplace.
• Participants have 60 days from the time they lose employer group health benefits to enroll in the Marketplace.
• COBRA participants who experience a qualifying event can terminate their COBRA continuation coverage and switch to a Marketplace plan during a special enrollment.

Participants should note that Marketplace coverage is prospective whereas COBRA coverage is always retroactive. This means electing Marketplace coverage will likely create a gap in coverage for participants and could steer participants to elect or maintain COBRA coverage to avoid uninsured medical costs.

Amid the evolving ACA clarifications, myCobraPlan is here to help your organization navigate these changes and how they affect your COBRA administration. Please contact us today to learn more about how we can help you stay compliant!