The Affordable Care Act (ACA) has brought numerous reforms to America’s health insurance industry. One of the primary concerns for individuals is how the new laws will affect their COBRA continuation coverage. To help Americans understand these changes, The Department of Labor (DOL) put out a Frequently Asked Questions list.
Did the ACA legislation eliminate COBRA?
No, the ACA did not eliminate COBRA or change the COBRA rules. For more information about COBRA, take a look at “An Employee’s Guide to Health Benefits under COBRA”.
Do the ACA reforms extend the COBRA premium reduction subsidy?
No, the ACA did not extend the eligibility time period for the COBRA premium reduction. The eligibility for this subsidy ended May 31, 2010.
Did the health care reform extend the COBRA time period beyond 18 months?
No, the maximum COBRA period was not extended. However, a plan may provide a longer coverage period beyond what’s required by COBRA. Typically, COBRA beneficiaries are eligible for group coverage for a maximum of 18 months for qualifying events, such as termination of employment or work hour reductions.
If during the initial period of coverage a second qualifying event occurs, a beneficiary may be permitted to receive a maximum of 36 months of COBRA coverage.
For individuals who become disabled, an extension of the 18 month period may be permitted under the qualifying events of a termination of employment or a work hour reduction. To qualify for this COBRA extension, the beneficiary must meet the following requirements:
- The Social Security Administration must rule that the individual became disabled during the first 60 days of COBRA coverage; and
- A copy of the Social Security ruling letter is sent within 60 days of receipt, but prior to the expiration of the 18-month coverage period. If the requirements are met, the entire family will qualify for 11 months of additional COBRA coverage.
How will my coverage be affected under my group health plan?
Many changes to employee health benefit plans have already taken place under the ACA. Beginning in 2014, many key changes will go into effect. One of the most important changes is the prohibition of exclusions for individuals with pre-existing conditions.
Does the ACA provide other coverage options for individuals eligible for COBRA?
Yes! The health insurance Exchange, also known as the Marketplace, was created under the ACA to offer other options that might be more affordable than COBRA coverage. Those eligible may be able to purchase more affordable plans for themselves and their families by using the Exchange website. Additionally, other options like Medicaid or a spouse’s group health plan may be available for your consideration during a “special enrollment period.”
For those who lose their job-based coverage, it is vital that you choose between your COBRA continuation coverage and other coverage options carefully. It may be impossible to switch to a different option once you’ve made your choice.
If I sign up for COBRA, can I switch to an Exchange plan? What about if I choose an Exchange plan and want to switch to COBRA?
If you sign up for COBRA, you can switch to an Exchange plan during the Exchange open enrollment period. The next open enrollment period is from November 15, 2014 to February 15, 2015.
You can also end your COBRA continuation coverage early and switch to an Exchange plan if you have another qualifying event (such as the birth of a child or getting married) through a “special enrollment period.” But be careful not to terminate your COBRA coverage early if you DON’T have another qualifying event because then you’ll have to wait until the next open enrollment period to enroll in Exchange coverage and may end up without coverage in the interim.
Once your COBRA continuation coverage expires, you’ll be eligible to enroll in Exchange coverage through a special enrollment period, even if the Exchange open enrollment period has ended.
What special transition rules, if any, would allow me to switch from COBRA to an Exchange plan outside of an open enrollment or special enrollment period?
Because many individuals eligible for COBRA and those enrolled in COBRA may not have understood or been aware of their Exchange enrollment options, the Department of Health and Human Services (HHS) has created a special enrollment period for exceptional circumstances. Under this special enrollment period, persons eligible for COBRA and COBRA enrollees may enroll in plans through the Exchange for a limited time. These individuals have through July 1, 2014, to select a plan through the Exchange.
Eligible individuals should contact the Exchange call center (1-800-318-2596) to activate this special enrollment period. They should inform the call center that they are calling about their COBRA benefits and the Exchange. If they are deemed eligible for the special enrollment period, individuals may view all plans available to them and complete the enrollment process over the phone or on the website by creating an account on www.healthcare.gov or logging into their existing account.
The experts at ERM Insurance Brokers in Irvine, California can help you decide what type of continuation coverage is best for you.
Call (949) 222-0444 to speak with a member of our team.