On May 2nd, the Department of Labor (DOL) released updated COBRA notices for employers to provide workers informing them of the option to elect coverage through the Health Insurance Marketplace, rather than continuing COBRA coverage.
The Marketplace option provides workers with an alternative to continuing their former employer’s health plans through COBRA.
COBRA coverage allows an employee to continue their health care plan through their employer, but they are 100% responsible for the full premium cost.
If a worker decides to elect COBRA coverage, the coverage will backdate to the date they lost their coverage. If they incur any health claims during the gap between when they lose their previous coverage and when they elect COBRA coverage, they will be covered for reimbursement on services rendered.
On the other hand, when a worker receives their COBRA notice and decides to pursue a health plan option through the Marketplace, the coverage will not backdate to the date they lost coverage, it will instead become effective the date they successfully enrolled in the Marketplace.
Some major difference between the two options to note:
COBRA:
-Access to “group health plan”
-Employee has a specific time period to elect, and coverage will begin on the day they lost coverage
– Any incurred claims would be covered in gap between employer coverage and COBRA, as long as premium is paid
MARKETPLACE:
-Coverage begins on the day their plan is effective
-The worker will be uninsured until Marketplace coverage becomes effective
-May be eligible for subsidy or cost-sharing reduction
For more information regarding the updated notices, please check out the list of FAQs that has been posted to the DOL website: http://www.dol.gov/ebsa/faqs/faq-aca19.html
Source: http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/model-COBRA-notices.aspx
