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New Guidance on COBRA and ACA Marketplace Coverage: The Gap in Coverage is (Not Quite) Filled

March 2017

There has been much confusion and concern about the interplay between the COBRA continuation coverage rules and the new Health Insurance Marketplace established under the Affordable Care Act (the "Marketplace"). One important question has been how individuals could transition from COBRA continuation coverage to (often cheaper) Marketplace coverage. Also, many individuals are confused about whether they should continue their available COBRA continuation coverage or separately opt for coverage through the Marketplace. To help clarify the rules, the government agencies have issued some important new guidance.

COBRA continuation coverage is available to eligible individuals (qualified beneficiaries) who lose group health plan coverage due to certain qualifying events (such as job loss, divorce, employee death, and cessation of dependent child status). COBRA coverage is typically expensive (up to 102% of the full cost of group health plan coverage) and lasts for limited periods (e.g., 18 months after a termination of employment and 36 months for other qualifying events). By contrast, qualified health plans available in the Marketplace are generally cheaper and continue for as long as an individual wishes to pay for coverage. A problem arises where someone elects COBRA coverage and continues that coverage outside of an annual open annual enrollment period for Marketplace coverage (the first of which ended on March 31, 2014).

The government agencies were concerned that this understanding of the interplay between COBRA coverage and Marketplace coverage was not widely understood and may have left people forced to pay for COBRA coverage when they might prefer to pay less for the Marketplace coverage.

To learn more about the impact of this and other health care reform decisions, please visit Peel & Holland University, where we have posted a document titled New Guidance on COBRA and ACA Marketplace Coverage: The Gap in Coverage is (Not Quite) Filled.

 

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