COBRA, ACA, and Special Enrollment Rights

With the seemingly endless flow of guidance, updates, notices, and delays swirling about relative to the Affordable Care Act (ACA),  a rather important piece of guidance may have been overlooked.  Issued jointly by the Department of Labor (DOL) and Health and Human Services (HHS) earlier this month (May 2, 2014), this guidance provides an opportunity for individuals enrolled in COBRA coverage the option to dis-enroll in their COBRA coverage, and enroll in potentially lower cost individual health insurance coverage, FOR A LIMITED TIME.  (Click – )This week’s post addresses this guidance and provides additional information related to the transection of COBRA and the ACA.

A previous post addressed so called “special enrollment periods”, which allow eligible individuals the option of purchasing Individual health insurance coverage outside of the “open enrollment” time period –  There are very specific qualifying events that allow an individual access to Individual health insurance coverage before or after open enrollment.  The most common of these qualifying events is a “loss of coverage”.   The ACA stipulates that the loss of coverage has to be “involuntary”, or out of the control of the individual, in order for a special enrollment period to be triggered.  However, HHS was concerned that individuals eligible for COBRA in early 2014 were not made aware of the options on the Marketplace/Exchange. ENTER THE MAY 2, 2014 GUIDANCE!

The ACA does not permit a COBRA continuee to voluntarily terminate their coverage, and elect potentially lower cost Individual coverage on the Public Marketplace/Exchange.  However, HHS was “concerned that former Model COBRA Continuation Coverage Election Notices did not sufficiently address Marketplace options for persons eligible for COBRA”.   Based on presumed insufficient information with which to make an informed decision, HHS decided to provide a special enrollment period due to “exceptional circumstances”, allowing COBRA eligible individuals the opportunity to elect potentially lower cost Individual coverage from a Public Marketplace/Exchange.
Here are the details relative to this “Exchange Open Enrollment Period”:

  1. Affected individuals have until July 1, 2014 to take advantage of this (presumably) one time offer to voluntarily dis-enroll in COBRA, and enroll in an Individual plan offered through a FEDERAL Marketplace/Exchange.  Note: States that opted to have their own Exchange/Marketplace are “encouraged but not required” to allow this enrollment period.
  2. To receive the Exchange open enrollment period, eligible individuals are urged to contact the Marketplace/Exchange call center at 1-800-318-2596.
  3. Once/If determined eligible for the Exchange open enrollment period, individuals can view available plans on, and enroll either over the phone or online.
The guidance does not compel employers with affected former employees/dependents enrolled in COBRA coverage to notify them of this enrollment period.  However it may be a good idea to make affected individuals aware of this one-time opportunity to potentially lower their cost, and at the same time, terminate employer based, COBRA coverage.
IMPORTANT: Our clients are encouraged to contact our office if you have questions about notifying affected COBRA continuees of this right.
The DOL has updated their model COBRA notices (both initial and event) to reflect the option of Marketplace/Exchange coverage to COBRA eligible individuals.  These templates, along with a detailed FAQ can be accessed by clicking –