Archived Insight | May 4, 2020

Health Plan Sponsors: There Are New Model COBRA Notices

On May 1, 2020, the Employee Benefits Security Administration (EBSA) of the Department of Labor (DOL) released new model general and election notices for continued health coverage under COBRA. The most significant addition to the new model notices is a new section on Medicare.

The new language encourages individuals to fully consider their Medicare options prior to electing COBRA continuation coverage, particularly in light of the fact that individuals may incur a Medicare Part B late enrollment penalty if they do not enroll in Medicare within eight months of losing employer-sponsored coverage, regardless of whether they elect COBRA.

The notices also explain that plans may terminate COBRA continuation coverage for individuals who elect COBRA and later enroll in Medicare. However, if the individual is already enrolled in Medicare Parts A or B prior to electing COBRA, COBRA continuation coverage cannot be terminated because of enrollment in any part of Medicare.

EBSA also issued answers to frequently asked questions (FAQs) on COBRA and Medicare.

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Implications for plan sponsors

While the model COBRA notices are not required to be used by plans, the DOL considers use of the model notices to be good-faith compliance with the general notice content requirements of COBRA. Consequently, plan administrators should review their notices to determine whether revisions are appropriate in light of both new models.

If the plan’s notice does not already address Medicare and its impact on COBRA, plan administrators should consider adding that language to assure good-faith compliance with the new models.

Segal can work with plan administrators to update COBRA continuation coverage notices to reflect the new model language.

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This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.