Will PPACA Exchanges Replace COBRA?

On May 2, 2014, the Obama administration proposed regulations to clarify that people leaving a job may choose to purchase health coverage on federal and state marketplaces rather than obtaining it through COBRA. The administration argued that purchasing a private plan on the exchanges may be a cheaper alternative, especially since many of these outgoing workers may be eligible for subsidies.

COBRA, or the Consolidated Omnibus Budget Reconciliation Act, applies to companies with 20 or more employees and allows workers the right to continue their health benefits for a certain amount of time after leaving a job or undergoing other qualifying life changes.

The proposed changes would allow individuals that are leaving a job or losing employer health insurance to enroll in an exchange plan before the next enrollment period, which begins November 15. The proposed regulations would also amend the notices people receive when they are eligible for COBRA coverage to include information about plans available under the Patient Protection and Affordable Care Act (PPACA).

For further information on the proposed changes, review posted FAQs and updated model notices.

Department of Labor (DOL) FAQs

Health & Human Services (HHS) FAQs

Updated COBRA Model General Notice

Updated COBRA Model Election Notice