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Law360 (May 1, 2020, 8:29 PM EDT) -- The U.S. Department of Labor on Friday rolled out new model notice forms for employers looking to comply with COBRA's notice requirements, adding information explaining why enrolling in Medicare might be a better option for some and posting a new FAQ to its website.
According to the agency's statement, the new model notices let recipients know that there could be advantages to enrolling in Medicare before electing to continue their health care coverage through the Consolidated Omnibus Budget Reconciliation Act, or to choosing Medicare coverage as an alternative to COBRA altogether.
The new notices also inform people who are eligible for benefits under both laws that choosing COBRA coverage first can have an impact on their enrollment in Medicare, the agency said.
U.S. Secretary of Labor Eugene Scalia said in the statement that the change was prompted by a letter from U.S. Reps. Kevin Brady, R-Texas; Virginia Foxx, R-N.C.; Richard Neal, D-Mass.; Frank Pallone, D-N.J.; Bobby Scott, D-Va.; and Greg Walde, R-Ore.
"The information we're providing today will help Medicare-eligible Americans make key decisions regarding their healthcare coverage," Scalia said. "As many individuals face economic hardship related to coronavirus, the department will continue to inform workers and help them avoid incurring unnecessary health costs."
In the frequently asked questions issued by the Labor Department's Employee Benefits Security Administration, the agency reiterated that employers that use the model notices will be considered in compliance with COBRA's notice requirements.
The FAQ also provided guidance on how Medicare and COBRA interact, noting that those who don't initially enroll in Medicare because they're still employed have eight months to do so starting the month after either their employment or their group health plan ends.
Choosing to first elect COBRA can result in a late payment or gap in coverage if someone later changes their mind and decides they want Medicare Part B, the FAQ said. And if someone chose Medicare Part A or B after previously choosing COBRA, the plan might terminate their continuation coverage.
The agency further pointed out in the FAQ that if someone is enrolled in both COBRA and Medicare, Medicare will usually pay first.
A number of large companies recently have found themselves facing lawsuits contending that they deviated from the DOL's model notice form for their own benefit in violation of the Employee Retirement Income Security Act, as amended by COBRA.
Nestle Waters North America Inc. was hit with a proposed class action on April 28, alleging that the company's COBRA notices were meant to scare workers away from continuing coverage. The following day, PepsiCo Inc. and a former employee informed the court that they reached a settlement in a suit claiming PepsiCo's notices attempted to steer workers toward the insurance market.
--Editing by Jack Karp.
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