For the first time since 1986, the U.S. Department of Labor has proposed new rules affecting the COBRA notice requirements. COBRA rules affect individuals’ rights to continue group health coverage under certain circumstances. For employers the consequences for not giving written notice in accordance with COBRA rules can be steep, including having to pay an employee’s uncovered medical bills, attorney’s fees, and penalties. Here’s a look at key points of the proposed changes.
Initial Notice Provision
As soon as employees elect group health coverage they are entitled to information about COBRA. Under the proposed regulations, plan administrators would still be required to provide basic information about COBRA rights, including how long an individual has to elect COBRA and which notices the employee must provide, but how that information is given would be changed.
The new rules explain that the initial notice plan administrators provide must be written in plain language and clearly describe, among other things, when coverage can be continued, the events that trigger an employee to provide notice to the plan, how that notice must be provided, and to whom it must be directed. The proposed rules change when this initial notice is given to employees. Health plans would be required to provide it no later than 90 days after plan coverage begins or on the first day the plan administrator learns the employee or a qualified beneficiary is entitled to elect continuation coverage, whichever occurs first. Under the proposed rules plans would be allowed to include this initial information in the summary plan description (SPD).
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Under the new rules, the SPD would also need to include information about the Trade Act of 2002, which provides an additional 60-day COBRA election period for employees eligible for trade adjustment assistance (TAA).
Employer Notice of Qualifying Events
Under the proposed changes, employers would have to notify plan administrators of qualifying events affecting employees, such as certain types of job loss, reduced work hours, an employee’s death, or enrollment in Medicare. This notice would have to be given either within 30 days of the event or 30 days after the loss of coverage. The proposed rules instruct the employer to tell the plan administrator the employee’s name, the date of the qualifying event, and the name of the plan.
Employee Notice
COBRA rules require employees to give plan administrators notice of certain events. Under the proposed rules, employees would still have 60 days to notify plan administrators of qualifying events, such as divorce, separation, the loss of dependent status, a change in disability status, or the occurrence of a second qualifying event. But because plans can set their own notice standards, the proposed rules would require that plans keep the employee notice requirements reasonable and force plans to accept a notice that is timely and contains enough information for the plan administrator to identify the qualifying event, the date it occurred, and the plan involved, even if it doesn’t meet all of the plan’s notice requirements.
COBRA Election Notice
Under the new regulations, after a plan administrator became aware of a qualifying event, it would be required to provide written COBRA election notices to plan participants and beneficiaries within 14 days. The election notice would be required to include all the information employees or covered beneficiaries would need to decide whether to elect COBRA coverage. This would include describing the health plan options available, premium payment requirements, consequences of not electing coverage, length of COBRA coverage, who may elect coverage, and how coverage may be extended for disability or a second qualifying event.
Other Notices
Within 14 days of receiving notice of a qualifying event, the proposed rules would require a plan to notify an employee’s spouse or beneficiary who is not eligible for COBRA continued coverage of the reason they do not qualify for coverage.
If a plan terminates coverage before the end of the COBRA period, it must notify that person why coverage has ended early, the date coverage will end, and any rights the individual may have to elect another group or individual coverage. The proposed rules would require this notice be given as soon as is practical after a termination decision is made and be written in a way that can be easily understood.
The proposed rules also detail how plan administrators must give notice to spouses and dependent children.
For More Information
Legislation passed last year made changes to Cal-COBRA—California’s own health coverage continuation law—that could further affect your COBRA notice requirements.