Employees whose group health coverage terminates may have COBRA continuation rights to coverage in certain circumstances. Now the U.S. Department of Labor (DOL) has released its final rules on notice requirements under COBRA, which covers employers with 50 or more employees. Because the final rules differ in some respects from the proposed rules, it’s a good idea to take the time now to ensure you’re in compliance, even if you’ve already made changes based on the proposed rules.
General COBRA Notice
At the time employees choose group health coverage, they’re entitled to information about COBRA. The final rules state that this general COBRA notice must be given to each covered employee (and his or her spouse, if covered under the plan) no later than 90 days after group health coverage begins. Note that if an employee becomes eligible for COBRA within this 90-day period, no separate general notice is required—just the detailed COBRA election notice (see below).
Employer Notice of Qualifying Events
Employers must 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. The final rules specify that this notice must be given either within 30 days of the event or 30 days after the loss of coverage. The notice must include the employee’s name, date of the qualifying event, and the plan name.
Employee-Provided Notices
Employees generally have at least 60 days to notify plan administrators of a qualifying event or the occurrence of a second qualifying event. The final rules clarify that the clock starts ticking on the 60-day period with whatever happens last: the date of the qualifying event, the date on which there is a loss of coverage, or the date on which the qualified beneficiary is informed of their obligation to provide notice and the procedures for providing notice.
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The final rules require plans to establish reasonable procedures for furnishing these notices. A plan’s procedures generally will be considered reasonable if they’re described in the summary plan description, specify who’s designated to receive notices, and describe the means beneficiaries must use for giving notice and the required content of the notice.
Notices from Plan Administrators
The final rules require that plan administrators furnish a detailed election notice to qualified beneficiaries within 14 days after receiving notice of a qualifying event. Information about Health Insurance Portability and Accountability Act (HIPAA) rights and plan contact information must be included in the election notice. In a departure from the proposed regulations, information concerning alternative coverage and conversion rights need not be included. A revised model election notice is included in the final regulations.
Other Requirements
The final rules state that notice of unavailability of COBRA coverage must be provided within 14 days after receipt of the notice of a qualifying event.
Also, if COBRA coverage terminates before the end of the COBRA period, the plan must notify the individual why coverage has ended early, the date it will end, and any rights the individual may have to elect another group or individual coverage. This notice must be given as soon as is practical after a termination decision is made and written in an easily understood way.
For More Information
The new regulations are effective the first plan year beginning after Nov. 26, 2004. Before that date, plans may rely on either the proposed rules or the final rules (including the model forms as proposed or as finalized).