Benefits and Compensation

IRS Seeking Comments on Paperwork Burden of COBRA’s Notice Rules

Have you noticed how much notice issues regarding federal continuation coverage seem to be cropping up everywhere—such as in the news, the courts, and the administrative agencies? Well, the latest matter involves part of the regular evaluation of paperwork requirements conducted by the Internal Revenue Service (IRS).


In a December 7, 2020 notice published in the Federal Register (85 Fed. Reg. 78935), the IRS requested comments on notice requirements for continuation coverage applicable to group health plans under the Consolidated Omnibus Budget Reconciliation Act (COBRA).


By way of background, COBRA’s regulatory jurisdiction is divided primarily between the IRS and the U.S. Department of Labor (DOL).  Technically, the Department of Health and Human Services (HHS) is also able to issue regulations for COBRA coverage as applicable to state and local government plans. However, HHS is supposed to conform its regulatory guidance to the IRS regulations.

This division of authority is provided for in the COBRA legislative history. There, Congress said that the DOL has authority to issue regulations implementing the COBRA notice and disclosure requirements. The IRS has authority to issue regulations on pretty much everything else, including the key operative rules for COBRA administration (such as defining plans subject to COBRA, qualifying events, election rights, and duration of COBRA coverage).

The IRS and DOL have both used their COBRA regulatory authority to issue regulations and other guidance (including DOL model COBRA notices) that help plan administrators navigate through the technical and complex COBRA requirements.

In the IRS’s case, regulations implementing the COBRA continuation coverage requirements impose certain compliance standards regarding (among other things):

  • Requiring covered individuals to notify the plan of a divorce from the covered employee, a dependent child’s ceasing to be dependent, and disability in order to elect COBRA coverage.
  • In cases where a qualified beneficiary’s COBRA premium payment is short by an insignificant amount, requiring the plan to notify the individual if the plan does not wish to treat the shortage as a full payment.  
  • If a healthcare provider contacts a plan to confirm coverage of a qualified beneficiary, requiring that the plan disclose the qualified beneficiary’s complete rights to coverage.

Comments on Notice Requirements

The December 7 IRS notice was issued as part of IRS information collection requirements, which undergo regular extension as mandated by the Paperwork Reduction Act of 1995 (PRA). The extension process includes a public comment period.

As part of this regulatory review process, the IRS is requesting comments on:

  • Whether the collection of information is necessary for the proper performance of the IRS’s functions, including whether the information shall have practical utility;
  • The accuracy of the IRS’s estimate of the burden of collection of information;
  • Ways to enhance the quality, utility, and clarity of the information to be collected;
  • Ways to minimize the burden of the information collection of on respondents, including by using automated collection techniques or other forms of information technology; and
  • Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.

Although this notice and comment period seem to be part of a bureaucratic process and not necessarily a substantive matter, it still may provide plan sponsors and administrators with an opportunity to comment to the IRS about the burdens of notice requirements generally. 

Admittedly, the IRS probably cannot do too much to change the DOL notices and notice rules. Nevertheless, there are many notice and administrative rules within the IRS’s jurisdiction. Perhaps this open invitation to comment could be used as an opportunity to express some of the challenges faced by plan administrators and to propose reasonable solutions to those challenges.

The deadline to provide written comments is February 5, 2021. Comments should be submitted to Kinna Brewington, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224.

For more details, contact LaNita Van Dyke at the same IRS address, (202) 317-6009 or at Commenters should refer to Continuation Coverage Requirements Application to Group Health Plans, OMB Number: 1545-1581.

Paul M. Hamburger is co-chair of the Employee Benefits, Executive Compensation, and ERISA Litigation Practice Center and head of the Washington, D.C., office of law firm Proskauer Rose LLP. He is also a leader of the Practice Center’s health and welfare subgroup and a member of Proskauer’s Health Care Reform Task Force. Hamburger has more than 35 years of experience in advising employers and administrators and is the author of numerous articles and publications on COBRA and other employee benefits issues affecting pension and welfare plans. Hamburger is contributing editor of Mandated Health Benefits—the COBRA Guide and managing author of The New Health Care Reform Law: What Employers Need to Know (A Q&A Guide), 5th Edition.

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