COBRA Articles
New Year, New COBRA Notices
- Notice Regarding Adult Children. The new health reform law requires private health insurers that offer dependent coverage to children to allow young adults up to age 26 to remain on their parent's insurance plan. This provision applies to an enrollee’s adult children, whether married or unmarried, even if the adult child no longer lives with the parents, is not a dependent on a parent’s tax return, or is no longer a student. So, if they aged out at anytime in the past three years, they might just age right back in. However, this extended eligibility does not apply to the adult child’s spouse or children. (Note: plans that do not provide dependent coverage are not required to do so under the act.)
The expansion of eligibility is effective for plan or policy years beginning on or after Sept. 23, 2010. Calendar year plans will have to comply as of Jan. 1, 2011. This enrollment opportunity (including the written notice) must be provided no later than the first day of the first plan year beginning on or after September 23, 2010, and potentially includes the children of COBRA participants. Model language to satisfy the age 26 notice requirement can be found at www.dol.gov/ebsa/dependentsmodelnotice.doc. - Notice of Material Plan Changes. As required by the Affordable Care Act, participants must be provided with a notice if changes have been made to an insurance plan. Changes can be communicated by issuing a Summary of Material Modification (SMM) or a Summary of Material Reduction in Covered Services/Benefits (SMR). An SMM communicates general changes to plan benefits. The SMM must be issued to all covered participants no later than 210 days following the plan year in which the change is adopted. An SMR communicates any “material reduction in benefits or services.” It must be sent to all covered participants within 60 days of adoption of the material reduction, and again, DO NOT forget your COBRA participants. There is no standard format or required language for an SMM or SMR, so a summary of changes that also conveys the value of benefits can be easily developed.
- Notice of Grandfathered Status. Group health plans in effect on or before March 23, 2010, are generally considered “grandfathered” for purposes of the Patient Protection and Affordable Care Act (PPACA). A grandfathered health plan can preserve certain basic health coverage that was already in effect when the law was enacted. Being a grandfathered health plan means the plan or policy may not include certain consumer protections of the Affordable Care Act that apply to other plans.
To maintain status as a grandfathered health plan, a plan or health insurance coverage must include a statement in any plan materials provided to all participants or beneficiaries, including COBRA participants, describing the benefits provided under the plan or health insurance coverage. The notice must state that the plan or coverage believes it is a grandfathered health plan within the meaning of section 1251 of the Patient Protection and Affordable Care Act and must provide contact information for questions and complaints. Model language to satisfy the grandfathered status notice requirement can be found at www.dol.gov/ebsa/grandfatherregmodelnotice.doc.
Change is definitely in the air this year, and 2011 will no doubt provide other clarifications and COBRA changes. Each of the new changes in the mandates will likely affect your COBRA participants as well as your actives. So remember, you can leave the old year behind, but don’t forget your COBRA people. Happy New Year!
Robert Meyers has more than 20 years of experience in business management and COBRA. He is the founder and president of Kansas-based COBRA administrator COBRAGuard. For questions or more information, please visit COBRAGuard.net or e-mail Robert at robert.meyers@cobraguard.net.
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