Judy Kamens Compliance Specialist View Bio

Healthcare Reform

November 12, 2019

COBRA Notice and Disclosure Rules

Download this document as a PDF: COBRA Notice Requirements

To administer coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA), employers and plan administrators are required to provide specific notices and disclosures to covered individuals and qualified beneficiaries. The most significant COBRA notice requirements for plan administrators are the general notice and the election notice.

  • Plan administrators must provide covered individuals with the general notice within 90 days after their group health plan (GHP) coverage begins.
  • Plan administrators must provide qualified beneficiaries with an election notice within 14 days after receiving notice of a qualifying event (44 days under certain circumstances).

Qualified beneficiaries are also subject to notice requirements under COBRA. Qualified beneficiaries are required to notify the plan administrator when certain qualifying events occur, such as a divorce or a dependent child’s loss of dependent status.

GENERAL NOTICE
Plan administrators must provide a written general notice of COBRA rights to each covered employee and spouse (if any) within 90 days after their coverage under a GHP begins. The general notice must also be sent to any new dependents added to the plan after the employee’s initial enrollment. In this case, the general notice must be provided within 90 days of the effective date of the new dependent’s coverage.

The general notice must include information about the plan coverage, a list of individuals who can become qualified beneficiaries under the plan, an explanation of the qualified beneficiaries’ obligations when a qualifying event under COBRA occurs and other details.
A plan administrator may incorporate the general notice into the GHP’s summary plan description (SPD), but only if the SPD:

  • Contains all of the information that is required to be included within the general notice; and
  • Is delivered in compliance with the delivery rules applicable to COBRA notices.

A single general notice may be provided to a covered employee and his or her spouse if they reside at the same address. However, hand-delivery of the general notice to the covered employee at the workplace does not constitute delivery to the spouse.

Model Notice: The DOL has a COBRA Model General Notice that can be used by single-employer group health plans to meet their notice obligations. Employers are not required to use the DOL’s model notice. However, use of the model notice, appropriately completed, will be considered by the DOL to be good faith compliance with COBRA’s coverage requirements for the general notice.

EMPLOYER’S NOTICE OF A QUALIFYING EVENT
Employers are required to notify their plan administrators when any of the following qualifying events occurs:

  • Death of a covered employee;
  • Termination of a covered employee’s employment (for reasons other than gross misconduct);
  • Reduction in the hours of a covered employee’s employment;
  • A covered employee’s entitlement to Medicare; or
  • The employer’s Chapter 11 bankruptcy filing.

The employer’s notice to the plan administrator must be provided within 30 days after the later of:

  • The date of the qualifying event; or
  • The date on which a qualified beneficiary would lose coverage because of the qualifying event.

QUALIFIED BENEFICIARY’S NOTICE OF A QUALIFYING EVENT

Covered employees and qualified beneficiaries are required to notify the plan administrator when any of these events occur:

  • The covered employee divorces or legally separates from his or her spouse;
  • A covered child loses dependent status;
  • A second qualifying event entitles a qualified beneficiary to extend continuation coverage beyond an 18-month maximum; or
  • The Social Security Administration (SSA) determines that a qualified beneficiary who is entitled to a maximum of 18 months of continuation coverage has become disabled, if the disability determination is made during the first 60 days of the qualified beneficiary’s continuation coverage.

Plan administrators must establish reasonable procedures for covered employees or qualified beneficiaries to provide these notices. The procedures should be described within the SPD. The SPD may require covered employees or qualified beneficiaries to use a specific form for the notices, as long as the form is readily available without cost.

Unless the GHP provides a more generous deadline, covered employees and qualified beneficiaries must provide the notices within at least 60 days of the later of:

  • The date of the qualifying event (the covered employee’s divorce or legal separation, the child’s loss of dependent status, or a second qualifying event or SSA disability determination that would entitle a qualified beneficiary to extend continuation coverage beyond 18 months);
  • The date on which the qualified beneficiary would lose coverage as a result of the qualifying event; or
  • The date on which the qualified beneficiary was first notified of the obligation and procedures for providing notice.

A qualified beneficiary whose continuation coverage is extended beyond an initial 18-month maximum due to an SSA disability determination must notify the plan administrator if the SSA makes a later determination that he or she is no longer disabled. The notice procedures outlined in an SPD may require the qualified beneficiary to provide this notice within at least 30 days of:

  • The SSA’s determination that the qualified beneficiary is no longer disabled; or
  • The date on which the qualified beneficiary was first notified of the obligation and procedures for providing notice.

COBRA ELECTION NOTICE
After receiving notice of a qualifying event, the plan administrator must notify qualified beneficiaries of their right to elect continuation coverage under COBRA. The election notice must be provided no later than 14 days after the plan administrator’s receipt of the notice of a qualifying event.

In many cases, the employer is also the plan administrator. For qualifying events where the employer is required to provide notice to the plan administrator (for example, employee’s termination or reduction in hours, death of the employee or employee becoming entitled to Medicare) and the employer is also the plan administrator, the election notice must be provided to the qualified beneficiary within 44 days of the later of:

  • The date of the qualifying event; or
  • The date on which the qualified beneficiary loses coverage due to the qualifying event.

Plan administrators may mail a single COBRA election notice to all qualified beneficiaries (for example, employee, spouse and dependent children) who reside at the same address. However, the election notice must identify the qualified beneficiaries covered by the notice by name or status (for example, former spouse) and explain that each qualified beneficiary has a separate and independent right to elect COBRA coverage.

PLAN ADMINISTRATOR’S NOTICE OF COBRA INELIGIBLITY
If a plan administrator determines that an individual is not eligible for continuation coverage after it receives notice of a qualifying event relating to that individual, the plan administrator must notify the individual of the reasons he or she is not eligible for COBRA coverage. This notice is due within the same time periods applicable to election notices. Plan administrators may send one notice of COBRA ineligibility to all qualified beneficiaries who reside at the same address.

PLAN ADMINISTRATOR’S NOTICE OF EARLY TERMINATION
If a plan administrator determines that a qualified beneficiary’s COBRA coverage will terminate before the end of the plan’s maximum period for the coverage, the plan administrator must notify the qualified beneficiary as soon as practicable after the determination. The notice must explain why the coverage will terminate earlier than the end of the maximum coverage period, provide the date the coverage will terminate and describe any rights the qualified beneficiary may have to elect other coverage. Plan administrators may provide one notice of early termination to all qualified beneficiaries who live at the same address.

DELIVERY REQUIREMENTS
General Requirement
Plan administrators must provide COBRA notices to individuals in a manner that is consistent with the DOL’s requirements for delivering documents required by the Employee Retirement Income Security Act (ERISA).

Under ERISA, employers must use delivery methods reasonably calculated to ensure actual receipt of this information by plan participants and beneficiaries. In general, employers may satisfy this delivery method requirement by mailing the documents to employees’ homes, distributing the documents to employees at work or including the information in a company newsletter or publication.
Rules for Electronic Delivery

The DOL has established a “safe harbor” for using electronic media to satisfy ERISA’s delivery method requirements. This includes delivering documents by email, using a company website to post documents and providing documents on other electronic media. The DOL’s safe harbor allows employers to distribute documents electronically to: (1) employees with work-related computer access; and (2) other plan participants and beneficiaries who consent to receive disclosures electronically.

In addition to the consent requirement described above for individuals without work-related computer access, the DOL’s safe harbor imposes the following requirements on electronic delivery:

  • A notice must be sent either electronically or in paper form to plan participants and beneficiaries at the time the document is provided electronically.
  • Employers must take steps to ensure that the electronic delivery results in actual receipt. For example, this may include using electronic mail features, such as a return receipt or notice that the email was not delivered, or conducting periodic reviews or surveys to confirm receipt of the transmitted information.
  • Plan participants and beneficiaries are entitled to receive a paper copy of the disclosure provided electronically.
    Application to COBRA Notices

Employers must provide COBRA notices to nonemployees in certain situations. For example, the general notice must be provided to covered employees and spouses within 90 days of initial plan participation. Also, an election notice must be provided to each qualified beneficiary who has the right to elect COBRA coverage.

As a general rule, an employer may send a single COBRA notice to employees and family members who reside at the same address. However, providing the COBRA notice to the employee at work (for example, through in-hand delivery) does not satisfy the employer’s obligation to provide the notice to family members. Also, if employers use electronic delivery, they must follow the DOL’s rules for obtaining consent prior to using electronic delivery for nonemployees, such as spouses. It is not enough to electronically provide a COBRA notice to employees with instructions to share it with family members.

Due to this complexity and potential for error, many employers mail COBRA notices to employees and their family members rather than using other delivery methods, such as email or in-hand delivery to employees at work.

To see all COBRA notice & disclosure rules, download the official PDF: COBRA Notice Requirements

This Compliance Overview is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice.
Readers should contact legal counsel for legal advice.