Updated Model COBRA Notices and FAQs Explain Interactions Between Medicare and COBRA

The DOL has posted updated model COBRA notices and related FAQs to help qualified beneficiaries better understand the interactions between Medicare and COBRA. The revisions are not directly related to the COVID-19 pandemic, but the DOL explains in a news release that it continues in its efforts to inform workers and help them avoid unnecessary health care costs as they face economic hardship related to the pandemic. Here are highlights:

• Enrollment in COBRA Instead of Medicare. The updated general (or initial) notice and election notice now include identical paragraphs addressing whether a qualified beneficiary may enroll in Medicare instead of COBRA when group health plan coverage ends. These paragraphs explain that employed individuals who do not enroll in Medicare Part A or B when they are first eligible have an 8-month Medicare special enrollment period beginning with the earlier of the month employment ends or the month after group health plan coverage based on current employment ends. The updated notices advise that individuals who elect COBRA rather than enrolling in Medicare may have to pay a Part B late enrollment penalty and have a gap in coverage if they later decide they want Part B coverage. Also, individuals who elect COBRA and later enroll in Medicare while COBRA is still in effect may have their COBRA coverage terminated. However, if Medicare Part A or B is effective on or before the date of the COBRA election, COBRA may not be discontinued due to Medicare entitlement, even if the qualified beneficiary enrolls in the other part of Medicare after the date of the COBRA election.
• Impact on Medicare Secondary Payer Status. The updated notices also emphasize that, for individuals enrolled in both COBRA and Medicare, Medicare generally pays first while COBRA pays second. And certain plans may pay as if secondary to Medicare even if the qualified beneficiary is not enrolled in Medicare.
• Use of Models. Three FAQs issued along with the updated notices repeat the Medicare information included in the notices and point out that the models are available on the DOL website in modifiable, electronic form. As in the past, plan administrators must complete the blanks in the notices with the appropriate plan information.

EBIA Comment: While use of the DOL’s model notices is not mandatory, many plans use them as the basis for their own notices. The FAQs include a reminder that use of the models, if appropriately completed, will be considered good faith compliance with COBRA’s notice content requirements. Plan sponsors, COBRA administrators, and advisors should familiarize themselves with the revised models and adapt their own notices accordingly. For more information, see EBIA’s COBRA manual at Sections XV.D (“The DOL’s Model Initial Notice”), XVIII.E (“The DOL’s Model Election Notice”), and XXX.B (“The Interactions Between COBRA and Medicare”). You may also be interested in our webinar “Medicare Check-Up for Group Health Plans” (recorded 4/16/2020).

Contributing Editors: EBIA Staff.