COBRA:
FINAL NOTICE REGULATIONS
The U.S.
Department of Labor recently issued final COBRA notice regulations.
These regulations apply to all group health, dental and vision plans
sponsored by employers with twenty or more employees (in Illinois, employees
covered by group plans with two or more participants may also have rights to
continuation coverage under state law). The
regulations are effective for plan years beginning on or after November 26, 2004
(for calendar year plans, compliance is required as of January 1, 2005).
The highlights of the COBRA notice regulations include:
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The
regulations prescribe model COBRA notices, including the general notice of
COBRA rights for newly covered employees and the COBRA election notice to be
given to employees and beneficiaries who have incurred a qualifying event
such as loss of employment, death or divorce.
These notices are available on-line at www.dol.gov/ebsa/modelgeneralnotice.doc
and at www.dol.gov/ebsa/modelelectionnotice.doc.
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Covered
plans must establish “reasonable procedures” for employees and covered
dependants to follow when providing notice to the plan of certain qualifying
events, such as divorce, legal separation, a Social Security determination
of disability and a child’s failure to meet coverage requirements relating
to age or status as a full-time student.
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Employers
who are plan administrators will have 44 days to give beneficiaries the
COBRA election notice following the loss of coverage due to termination of
employment, reduction or loss of employment, death or Medicare entitlement.
The period is reduced to 14 days in the case of those qualifying
events identified above as to which beneficiaries must provide notice to the
plan.
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Two
new notice requirements are established in the regulations.
If an employee or beneficiary claims that a qualifying event has
occurred and the plan decides that the person is not entitled to
continuation coverage, the plan must notify the person of this decision in
writing within 14 days. As to
employees and beneficiaries already on COBRA coverage, if coverage
terminates for any reason prior to the end of the applicable 18, 29 or 36
month coverage period (for example, as a result of non-payment of premiums
or qualification for other coverage), a notice of such termination must be
provided “as soon as practicable.”
This notice must also explain any other coverage rights that may be
available at that time, such as conversion rights under the group health
plan.
Required
Action: For employers with group
plans, the insurance company or third party administrator may provide updated
COBRA general election notices that comply with the new regulations.
However, employers must make sure that the notices relating to denial of
COBRA coverage and early termination of continuation coverage are prepared and
available for use. Both represent
new procedural requirements under COBRA. Similarly,
a notice procedure to be followed by employees and beneficiaries giving notice
to their employers of certain qualifying events should be communicated to
employees and beneficiaries by the effective date for the new regulations, or
January 1, 2005 for calendar year plans.
Edition Date:
June 28, 2004
Andrew
S. Williams
Aronberg Goldgehn Davis & Garmisa
One IBM Plaza, Suite 3000
Chicago, Illinois 60611
312/755-3145
awilliams@agdglaw.com
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