By Pension and Benefits Editorial Staff
The DOL’s Employee Benefits Security Administration (EBSA) has issued Frequently Asked Questions (FAQs) and revised COBRA model notices to address issues related to the interactions between Medicare and COBRA.
In general, COBRA allows employees (and their families) who would otherwise lose their group health coverage due to certain life events to continue their same group health coverage. These events include termination or reduction in hours, death of a covered employee, divorce or legal separation, Medicare entitlement and loss of dependent status. COBRA generally lasts for 18 months but, in some cases, can last up to 36 months.
Model notices. The revised model notices provide additional information to address COBRA’s interaction with Medicare. The model notices explain there may be advantages to enrolling in Medicare before, or instead of, electing COBRA. The notices also highlight that if an individual is eligible for both COBRA and Medicare, electing COBRA coverage may impact enrollment into Medicare as well as certain out-of-pocket costs.
The FAQs explain that the model general notice and model election notice are available on the DOL website at https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/cobra. The model notices are available in modifiable, electronic form. As with the earlier model notices, to use the model properly the plan administrator must complete it by filling in the blanks with the appropriate plan information.
DOL will consider use of the model notices available on its website, appropriately completed, to constitute compliance with the notice content requirements of COBRA.
Enrollment in Medicare. The FAQs explain there may be advantages to enrolling in Medicare before, or instead of, electing COBRA. In general, if an individual doesn’t enroll in Medicare Part A or B when first eligible because he or she is still employed, after the Medicare initial enrollment period, the individual has an 8-month special enrollment period to sign up for Medicare Part A or B, beginning on the earlier of the month after employment ends or group health plan coverage based on current employment ends.
If an individual doesn’t enroll in Medicare and elects COBRA continuation coverage instead, he or she may have to pay a Part B late enrollment penalty and may have a gap in coverage if the individual decides he or she wants Part B later. If the individual elects COBRA continuation coverage and later enrolls in Medicare Part A or B before the COBRA continuation coverage ends, the plan may terminate the continuation coverage. However, if Medicare Part A or B is effective on or before the date of the COBRA election, COBRA coverage may not be discontinued on account of Medicare entitlement, even if the individual enrolls in the other part of Medicare after the date of the election of COBRA coverage.
Medicare is primary payer. If an individual is enrolled in both COBRA continuation coverage and Medicare, Medicare will generally pay first (primary payer) and COBRA continuation coverage will pay second. Certain plans may pay as if secondary to Medicare, even if an individual is not enrolled in Medicare.
SOURCE: Employee Benefits Security Administration Release No. 20-834-NAT, May 1, 2020; https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/cobra-model-notices.pdf
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