Centers for Medicare and Medicaid Services ("CMS") has
released guidance regarding the interplay between COBRA and the
Health Insurance Marketplaces established under the Patient
Protection and Affordable Care Act. In particular, the guidance
addresses how individuals can transition from COBRA to Marketplace
Background. COBRA continuation coverage is available to eligible
individuals who lose group health coverage due to certain qualifying
events (e.g., job
loss, divorce, employee death). COBRA coverage is typically expensive
and lasts for limited time periods. Conversely, coverage offered via
the Marketplace is generally less expensive and continues for as long
as the individual is eligible for coverage.
Problem. When an individual elects COBRA coverage, he or she
cannot later drop COBRA at any time and enroll in Marketplace
coverage. Rather, when COBRA is voluntarily dropped, the individual
cannot enroll in Marketplace coverage until the next Marketplace
annual open enrollment period.
individuals may not have understood the applicable rules and, as a
result, may have locked themselves into much more expensive COBRA
Guidance. CMS has addressed this problem by creating a
Marketplace special enrollment periods for COBRA qualified
beneficiaries. This limited special enrollment period began on May 2,
2014, and ends July 1, 2014. During the limited special enrollment
period, any individual currently receiving COBRA coverage may
voluntarily opt out of COBRA and elect a qualified health plan
through a Marketplace.
of Guidance. While CMS provides relief
in the form of a limited special enrollment period in which
individuals can opt out of COBRA coverage and into Marketplace
coverage, one drawback is that the relief only applies to the
federally-operated Marketplace. CMS, however, has encouraged
state-based Marketplaces to provide similar opportunities.
guidance may be accessed at: http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/SEP-and-hardship-FAQ-5-1-2014.pdf