If your organization’s group health plan is subject to COBRA – this is, generally, if you have at least 20 employees on at least 50% of your typical business days – you are required to give certain notices to your participants. These notices are designed to describe their rights under COBRA, the Consolidated Omnibus Budget Reconciliation Act, to continue their coverage under qualifying circumstances.
Here is a summary of those required notices.
Within the first 90 days of coverage under your group health plan, you must provide a general notice that gives certain information about your employees’ COBRA rights.
The general notice must include:
- The name of the plan and the name, address, and telephone number of someone whom the employee and spouse can contact for more information on COBRA and the plan;
- A general description of the continuation coverage provided under the plan;
- An explanation of what qualified beneficiaries must do to notify the plan of qualifying events or disabilities;
- An explanation of the importance of keeping the plan administrator informed of addresses of the participants and beneficiaries; and
- A statement that the general notice does not fully describe COBRA or the plan and that more complete information is available from the plan administrator and in the SPD.
The Department of Labor has developed a model general notice that single-employer group health plans may use to satisfy the general notice requirement. It is available on the DOL website. In order to use this model general notice properly, you must complete it by filling in the blanks with the appropriate plan information. You are not required to use the model notice, but use of the model general notice, appropriately completed, will be considered by the Department to be good faith compliance with your general notice content requirements.
Qualifying Event Notice
Before a group health plan subject to COBRA must offer continuation coverage, a qualifying event causing loss of coverage must occur. The group health plan must be notified of the qualifying event and is not required to act until it receives an appropriate notice. Who must give notice depends on the type of qualifying event.
You, the employer, must notify the plan if the qualifying event, causing a loss of coverage, is:
- Termination of employment or reduction in hours of the covered employee;
- Death of the covered employee;
- Covered employee’s becoming entitled to Medicare; or
- Bankruptcy of a private-sector employer.
You must notify the plan within 30 days after the event occurs, by notifying the third-party-administrator, notifying the plan itself, or notifying another plan administrator that has responsibility for COBRA administrative duties.
Your covered employee or one of the qualified beneficiaries must notify the plan if the qualifying event, resulting in a loss of coverage, is:
- Legal separation; or
- A child’s loss of dependent status under the plan.
Group health plans are required to have procedures for how the covered employee or one of the qualified beneficiaries can provide notice of these types of qualifying events.
The plan can set a time limit for providing this notice, but the time limit cannot be shorter than 60 days, starting from the latest of:
- the date on which the qualifying event occurs;
- the date on which the qualified beneficiary loses (or would lose) coverage under the plan as a result of the qualifying event; or
- the date on which the qualified beneficiary is informed, through the furnishing of either the Summary Plan Description (“SPD”) or the COBRA general notice, of the responsibility to notify the plan and the procedures for doing so.
These procedures must describe how, and to whom, notice should be given, and what information must be included in the qualifying event notice. If one person gives notice of a qualifying event, the notice covers all qualified beneficiaries affected by that event.
If a group health plan does not have reasonable procedures for how to provide these notices, qualified beneficiaries are permitted to give notice (either written or oral) to the person or unit that handles the employer’s employee benefits matters. If the plan is a multiemployer plan, notice can also be given to the joint board of trustees; and if the plan is administered by an insurance company (or the benefits are provided through insurance), notice can be given to the insurance company.
After receiving a notice of a qualifying event, the plan must provide the qualified beneficiaries with an election notice, which describes their rights to continuation coverage and how to make an election. Generally, the election notice must be provided to the qualified beneficiaries within 14 days after the plan administrator receives the notice of a qualifying event.
The election notice should include:
- the name of the plan and the name, address, and telephone number of the plan’s COBRA administrator;
- identification of the qualifying event;
- identification of the qualified beneficiaries (by name or by status);
- an explanation of the qualified beneficiaries’ right to elect continuation coverage;
- the date coverage will terminate (or has terminated) if continuation coverage is not elected;
- how to elect continuation coverage;
- what will happen if continuation coverage isn’t elected or is waived;
- what continuation coverage is available, for how long, and (if it is for less than 36 months), how it can be extended for disability or second qualifying events;
- how continuation coverage might terminate early;
- premium payment requirements, including due dates and grace periods;
- a statement of the importance of keeping the plan administrator informed of the addresses of qualified beneficiaries; and
- a statement that the election notice does not fully describe COBRA or the plan and that more information is available from the plan administrator and in the SPD.
The Department has developed a model election notice that plans may use to satisfy their obligation to provide the election notice. This model election notice is also available on the DOL website. In order to use this model election notice properly, the plan administrator must complete it by filling in the blanks with the appropriate plan information. While use of the model notice is not required, the Department will consider use of the model election notice, appropriately completed, good faith compliance with the election notice content requirements of COBRA.
COBRA requires group health plans to give qualified beneficiaries an election period during which they can decide whether to elect continuation coverage, and COBRA also gives qualified beneficiaries specific election rights.
At a minimum, each qualified beneficiary must be given at least 60 days to choose whether or not to elect COBRA coverage, beginning from the later of the date the election notice is provided, or the date on which the qualified beneficiary would otherwise lose coverage under the group health plan due to the qualifying event.
Each qualified beneficiary must be given an independent right to elect continuation coverage. This means that when several individuals (such as an employee, his or her spouse, and their dependent children) become qualified beneficiaries due to the same qualifying event, each individual can make a different choice. The plan must allow the covered employee or the covered employee’s spouse, however, to elect continuation coverage on behalf of all of the other qualified beneficiaries for the same qualifying event. A parent or legal guardian of a qualified beneficiary must also be allowed to elect on behalf of a minor child.
Learn More About COBRA Requirements
For more information about COBRA, the required notices, and your obligations under these regulations, please visit the DOL website’s COBRA section.