Benefits and Compensation

One Tip on COBRA Compliance: Don’t Phone it In!

Paul Hamburger, Esq. of Proskauer Rose

It is tempting to use telephonic and e-mail delivery to send notices on COBRA continuation coverage rights, but this is hard to do and not very practical, says COBRA expert Paul M. Hamburger, Esq. of Proskauer Rose in Washington, D.C.

So the best way to ensure success compliance with COBRA’s continuation coverage rules – and to avoid expensive notice penalties and lawsuits – is to follow COBRA’s well-established good-faith standard: Sending the general/initial and election notices by first-class mail to the qualified beneficiary’s last known mailing address. Hamburger said that while many plan administrators send the notices via certified mail, this is something he does not recommend. In his view, once you require individuals to sign to prove receipt, what about the individuals who do not sign the mailing certification? They are not required to do so by law, so how do you prove that they received it? So, Hamburger stated it’s best to follow the well-established delivery method, under which plan administrators are not required to prove receipt. He also noted that hand delivery can be appropriate — under certain conditions. And employer and plan administrators should not forget to include COBRA rights language in summary plan descriptions (SPDs).

That’s just one of many COBRA compliance tips Hamburger gave at a July 20 webinar sponsored by Thompson Interactive. Hamburger, who is contributing editor of Mandated Health Benefits – The COBRA Guide, also shared a checklist that employers and plan administrators can use to make sure that their COBRA notice procedures are up to par:

  • Are procedures in each plan’s SPD? ___Yes ___No
  • Do the procedures specify the individual or entity designated to receive notice of a qualifying event or other COBRA-related information? ___Yes ___No   Identity of specific person:
  • Do the procedures specify the means by which COBRA-related information may be given (plan may require use of a specific form)? ___Yes ___No        Specific form required___Yes ___No
  • Do the procedures describe the type of information about the qualifying event or disability determination that is needed for the plan to provide COBRA coverage? ___Yes ___No
  • Do the procedures specify the period of time within which notice of COBRA-related information must be provided, which is at least:

Qualifying Event (QE)/Multiple QE: 60 days from latest of QE, loss of coverage, date of notice of procedures ___Yes ___No

Disability Determination: 60 days from latest of Social Security Act (SSA) determination, QE date, loss of coverage, date of notice of procedures AND within 18 months of COBRA coverage ___Yes ___No

Loss of Disability Status: 30 days from later of SSA determination or date of notice of procedures ___Yes ___No

  • Do the forms required to be used by qualified beneficiaries (QBs) provide for specific content that must be completed? ___Yes ___No

Note: The plan may require specific content as a pre-condition to providing COBRA coverage; however, if the administrator can figure out all of the information from what was given, the information provided must be accepted.

  • Does form allow QB to provide more information? ___Yes ___No
  • Does the form allow notice of COBRA-related information to be provided by the covered employee, any related QB, or any representative acting on behalf of the QB? ___Yes ___No
  • Does the notice allow for one notice of COBRA-related information to be sufficient for all related QBs? ___Yes ___No

Overall, Hamburger’s presentation showed that employers and plan administrators should not figuratively phone in their COBRA compliance efforts. Establishing good procedures, and regularly reviewing them, are key steps to a success COBRA program. Learn even more tips from this industry expert by getting the webinar, COBRA Notices and Disclosures: How to Do it Right and How to Fix It When Things Go Wrong, on CD or on demand.