CMS Issues Guidance Related to COBRA Coverage and Exchange Eligibility
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On April 21, 2014, CMS issued guidance, in the form of a frequently asked question (FAQ), clarifying how COBRA coverage impacts an individual's eligibility to enroll in the exchange and to receive a premium tax credit. As background, the open enrollment period for almost all exchanges ended March 31, 2014. Individuals may only enroll in the exchange midyear if they qualify for a special enrollment period due to a qualifying event. The FAQ clarifies that during the open enrollment period for the exchange, an individual who has voluntarily terminated his/her COBRA coverage (i.e., COBRA coverage has not been exhausted) will be eligible to enroll in a qualified health plan through the exchange. The individual may also be eligible to receive a premium tax credit.
Conversely, if it is outside the open enrollment period for the exchange, the voluntary termination of COBRA coverage does not trigger a special enrollment period. Thus, a COBRA participant who has not exhausted his/her maximum COBRA coverage period will not be eligible to enroll in the exchange midyear, nor will he/she will be eligible to receive a premium tax credit.