HR Happenings

Updated COBRA Notices and the Affordable Care Act (ACA)
The Obama administration announced updates to model notices that employers
must provide to employees, informing workers of their eligibility to
continue health care coverage through the Consolidated Omnibus Budget
Reconciliation Act (COBRA).
The Department of Labor (DOL) released a new model general notice form
and model election notice form for providing COBRA notices to employees.
Additionally, a notice of proposed rulemaking on the COBRA notice requirements were published.
Federal agencies also released an updated model notice regarding premium assistance under Medicaid and
the Children’s Health Insurance Program (CHIP).
The updated notices make it clear to workers that if they are eligible for COBRA continuation coverage
when leaving a job, they may choose to instead purchase coverage through the Affordable Care Act’s
(ACA) Marketplace.
Employees directed to the public exchange/Marketplace, where they may qualify for federal subsidies, are
less likely to feel they need to pay the full premium to continue with their former employer’s health coverage
through COBRA.
Workers and their families who are eligible for employer-sponsored coverage generally must be informed
of their right to COBRA continuation coverage at the start of employment. They must also be informed
of their right to purchase COBRA coverage when separating from a job. The proposed changes to the
model notices would offer information on more affordable options available through the Marketplace,
where workers and families may be eligible for financial assistance that would not otherwise be available
for COBRA continuation coverage.
The new COBRA notices offer an opportunity for employers to provide further encouragement and education
to plan participants about non-COBRA coverage options.
Employers are not required to use the model notices but plans that do use the model notice are presumed
to meet COBRA notice requirements. Employers that are covered under the COBRA Federal
regulation (more than 19 benefit eligible employees) should consider these revised model notices.
Potential Gap in Coverage
When a COBRA qualifying event occurs, coverage could be lost either immediately or, in many cases, at
the end of the month in which the event occurs (for example an employee terminates 5/25/14 and may
become COBRA eligible 6/1/14). Notice of COBRA rights (which will now explain Marketplace rules) is
not provided for weeks and, sometimes, a couple months after the qualifying event. At that point, there is
a gap between the loss of coverage and someone’s actual choice of COBRA or Marketplace coverage.
During that gap, individuals are at risk of significant claims if they need health care. The main purpose of
COBRA coverage is that it is retroactive to the date of the loss of coverage and is designed to fill that gap.
Volume 8, Issue 6 Latest in HR news and alerts
HR Happenings
Updated COBRA Notices and the Affordable Care Act (ACA) (cont’d)
Marketplace coverage, however, applies prospectively only. Therefore, individuals will be faced with a
choice: (a) elect the more expensive COBRA coverage retroactively to make sure claims are paid but then
be forced to continue that coverage until the next annual enrollment period (or a special enrollment period
if earlier); or (b) take the cheaper Marketplace coverage but suffer the gap in coverage and be forced to
pay for the claims incurred without coverage.
The choices and risks between COBRA vs. Marketplace is not explained in the new model COBRA notices.
Perhaps future guidance will solve this problem by allowing individuals the choice to opt out of COBRA
coverage and into Marketplace coverage on more frequent intervals.
For additional information, the DOL published frequently asked questions related to the proposed changes
to model notices on their website:
Guidance on Background Checks
Employers conducting background checks should be sure to evaluate their policies
to make sure they are in compliance with varies regulations pertaining to their hiring
process and the Fair Credit Reporting Act (FCRA). Non-discrimination legislation
such as the Americans with Disabilities Act (ADA), the Genetic Information
Nondiscrimination Act (GINA) and Title VII Civil Rights Act all should be considered
when creating background check policy and procedures.
Any personnel or employment records you make or keep (including all application
forms, regardless of whether the applicant was hired, and other records related to
hiring) must be preserved for one year after the records were made or after a
personnel action was taken, whichever comes later. If the applicant or employee files a charge of discrimination,
you must maintain the records until the case is concluded.
Professional Note: Treat everyone equally. It’s illegal to check the background of applicants and employees
when that decision is based on a person’s race, national origin, color, sex, religion, disability, genetic
information (including family medical history) or age (40 or older). For example, asking only people of a
certain race about their financial histories or criminal records is evidence of discrimination, the EEOC document
can help you with these and other topics
Latest in HR news and alerts June 2014
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Kathy Coughlin, President

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