News
DEPARTMENT OF LABOR - FINAL COBRA REGULATIONS
29 CFR Part 2590, Health Care Continuation Coverage; Final Rule
Effective Date
The DOL published final COBRA Notice regulations 5/26/04. The deadline for implementing the changes is the first day of your next plan year that begins on or after November 26, 2004.
HFS is implemented the changes for all of its COBRA Clients on 7/15/04.
New Model Notices
The DOL has produced two new model notices, the General Notice (also referred to as the initial notice that is due when an employee first becomes covered under your group health plan) and the Election Notice (the notice that is due upon the loss of coverage due to a qualifying event). These notices should replace the COBRA notices that are currently in use.
General Notice
The DOL has finally put a timeframe on when this notice is due. The notice must be delivered to the Employee and covered spouse 90 days from the date on which the covered employee or spouse first becomes covered under the group health plan. The General Notice is not required when the Employee or covered spouse has a qualifying event during the first 90 days of coverage, the Election Notice is all that is required in this circumstance.
Single Notice Rule
A single notice to the employee and covered spouse is allowed when the notice is addressed to both at their joint residence, and your latest information indicates that both reside at that address. This Single Notice Rule applies to all of the notices required under COBRA.
Notices to Dependent Children
There is no requirement to furnish a General Notice to dependent children. Separate Election Notices are only required for covered dependent children in the event that they lose coverage due to the loss of eligibility under the plan, or when your records indicate that the Dependent does not reside at the same address.
Using the SPD for the General Notice
The SPD can now be used as the General Notice, as long as the SPD is worded in a manner that includes the new required fields for a General Notice. The DOL made the timing for delivery of the General Notice and SPD the same, 90 days of becoming enrolled in the plan.
In Hand Delivery
The DOL has determined that in-hand furnishing of the General Notice at the workplace to a covered employee is deemed to be adequate delivery to the employee, but that would not constitute delivery to the spouse. In hand delivery of the General Notice (or an updated SPD) only satisfies the General Notice requirements if it is delivered to both the Employee and spouse (single mailing is allowed as stated above under the Single Notice Rule).
Deadline for providing an Election Notice
The DOL finally provided the deadline applicable to Plans who have not named a Plan Administrator for ERISA purposes, which is probably the case for 99.999% of all group health plans. The federal courts had already gone this route, and it is now included in the regulations.
An employer who has not named a Plan Administrator has 44 days from the loss of coverage to send the Election Notice. (If the employer has named a Plan Administrator, the Employer has 30 days to send the Plan Administrator the data, and the Plan Administrator has 14 days to send the Election Notice.)
Employee/Qualified Beneficiary Notice Procedure
The DOL addressed the obligation of the Employee/Qualified Beneficiary to inform the Employer/Plan Administrator of certain qualifying events. These events are:
- the occurrence of a qualifying event that is a divorce or legal separation of a covered employee from his or her spouse, or a dependent who losses eligibility under the plan;
- the occurrence of a second qualifying event after a person has become enrolled in COBRA continuation coverage, this only applies when the maximum COBRA continuation term available for the person is 18 or 29 months;
- a qualified beneficiary has been determined by the Social Security Administration to be disabled at any time during the first 60 days of continuation coverage; and
- a qualified beneficiary has subsequently been determined by the Social Security Administration to no longer be disabled.
NOTE: Item 1 is the only item that applies to Medical Reimbursement Plans (MFSA-flexible spending accounts established to pay medical expenses on a tax free basis). These plans can only be continued until the end of the plan year in which the qualifying event occurred.
The DOL addresses what an Employer can require from an Employee or Qualified Beneficiary regarding the notices that are required from the Employee or Qualified Beneficiary.
The DOL does not require a written procedure regarding Employee or Qualified Beneficiary notifications. However, an Employer that does not have a written procedure is deemed to accept verbal notifications when made upon certain Employer representatives, example an Employee's Manager. Depending on your organization, you need to decide whether tracking COBRA obligations and adherence to the COBRA time lines becomes impracticable without a dated written notice. If you elect to have a formal procedure for collecting notices that are due from your employees, then the terms of that procedure should be included in your SPD.
Two New Notice Requirements
There are no models or samples for these notices. 1) Plans are now required to send a written notice upon termination of COBRA coverage. HFS has been sending and documenting these notices for several years. 2) The "Notice Of Unavailability Of Continuation Coverage" is discussed below.
Notice Of Unavailability Of Continuation Coverage
As stated above under Employee/Qualified Beneficiary Notice Procedure, there are specific instances where the Employee or Qualified Beneficiary must notify the Employer or Plan Administrator of certain events (such as divorce, SSA Determination of Disability…). If it is determined that the request for COBRA coverage or an extension of COBRA coverage is denied, the DOL now requires a written response stating the reason(s) for the denial.
Example, a SSA Determination that does not follow the timeframes required to get the 29 month extension. Examples — it is not received until after 60 days from issue or after the 18 month COBRA term has expired.
When you receive any of these notices from an Employee or Qualified Beneficiary, please continue to forward the data to HFS. HFS will offer COBRA, extend COBRA coverage, or prepare a written response regarding the denial of the request.
NOTE: The written denial of COBRA coverage or the denial of an extension of COBRA coverage must be delivered to the Employee/Qualified Beneficiary within 14 days from the date you receive the request from the Employee/Qualified Beneficiary.