So, you think you have COBRA under control.
Then, you hear a whisper at Aunt Sally’s holiday party,
“I just got my COBRA Open Enrollment packet.”
“COBRA Open Enrollment packet?” [Long pause….]
You heard right. COBRA participants have the right to a COBRA Open Enrollment period.
What is COBRA Open Enrollment?
COBRA Open Enrollment is very similar to your typical open enrollment period. Qualified Beneficiaries are entitled to the same rights as active employees during open enrollment. They receive access to the same benefits, choices, and services that similarly situated employees have, including COBRA Open Enrollment. This means they have the right to change benefits and add/remove dependents during COBRA Open Enrollment.
Who needs to be offered COBRA Open Enrollment?
COBRA Open Enrollment must be offered to all active COBRA participants and any Qualified Beneficiaries. Qualified Beneficiaries include individuals who are still eligible to elect COBRA coverage.
However, COBRA is continuation coverage. Individuals must enroll in an existing COBRA benefit before enrolling during open enrollment. Plan sponsors do not need to offer COBRA Open Enrollment to individuals that declined, ended or otherwise do not elect COBRA coverage.
What benefits must be offered during COBRA Open Enrollment?
For the new plan year, plan sponsors must offer all COBRA eligible benefits provided to ‘similarly situated’ employees. This likely includes your health plan, dental and vision benefits. For example, you decide to offer a new health plan option. The health plan must be offered to COBRA participants.
What are the rules for Qualified Beneficiaries who are eligible to elect COBRA?
COBRA is continuation coverage. The Qualified Beneficiaries must enroll in continuation coverage for the existing plan year. Then, they are eligible to make benefits changes during COBRA Open Enrollment. If the individual fails to enroll in continuation coverage of the existing benefits, they would not be eligible during open enrollment.
When does COBRA Open Enrollment occur?
COBRA Open Enrollment will begin at some point before a new plan year starts but may continue up to 30 days after the effective date of the plan. This means an individual will have until January 30 to elect and/or change coverage in the plan beginning on January 1.
What happens if an active COBRA participant fails to elect coverage during COBRA Open Enrollment?
COBRA Participants have the same rights (and responsibilities) during open enrollment as similarly situated employees. If you require active enrollment by employees during open enrollment, you can require active enrollment by COBRA participants. If however, you have passive enrollment, COBRA participants can maintain their existing coverage and/or be enrolled in the default coverage option.
How are COBRA participants notified of COBRA Open Enrollment?
COBRA participants must receive an open enrollment packet, which contains all required open enrollment disclosures. Additionally, the packet must include any updates or changes to rate information. Plan sponsors may send these packets directly to COBRA participants.
Alternatively, plan sponsors may use a COBRA administrator to provide these packets. These packets are highly customized. Avoid a common pitfall and don’t assume your COBRA administrator automatically sends these on your behalf. COBRA Open Enrollment packets are generally an opt-in service. You will likely be asked to provide updated plan and rate information to your COBRA administrator.
If you are not sure, your COBRA open enrollment packets have probably not been sent. It is worth reaching out to your COBRA administrator.
While open enrollment is winding down for many, COBRA open enrollment might be just around the corner. Will you be caught off guard?
Department of Labor: https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/faqs/cobra-continuation-health-coverage-consumer.pdf