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New Department of Labor (DOL) Regulations for COBRA Notices
On May 28, 2003, the DOL proposed new regulations on the content and timing of COBRA notices. Furthermore, their proposal, if made final, would create a requirement for two additional notices. This recent DOL proposal includes a Model Initial Notice and a Model Election Notice for use by single-employer plans. The DOL intended to make these regulations final and effective for plan years starting on or after January 1, 2004. However, on September 17, 2003, the DOL announced that it planned to give employers an additional six months to comply with any new COBRA regulations once those regulations were made final.
WHAT WILL BE CHANGING?
Initial notice:
- The DOL has clarified that this notice should be provided within 90-days from the date that coverage begins (previously, there was no time frame specified).
- The DOL has added some additional content that needs to be included in the Initial Notice given to plan participants (attached is a bulleted list of this content). To ease this obligation, a Model Initial Notice was provided in the DOL’s proposal
and is attached.
- The DOL has commented that providing the Initial Notice to the employee at the workplace does not constitute notification to the spouse. This does not represent a change in the regulations, but rather a clarification that the Initial Notice should be sent to the employee’s home.
- The DOL has also cautioned that employers who are still using the Model Notice previously issued by the DOL can no longer rely on that notice
to be COBRA-compliant.
Qualified beneficiary notices:
- The qualified beneficiary must provide notice to the employer of a divorce, separation, or loss of dependent status within 60 days of the qualifying event. While this timing does not represent a change, the DOL has clarified that the employer must establish reasonable procedures for the employee to report these qualifying events, such as specific information on how to report and to whom. These procedures, which are specific to each employer, need to be detailed in the Initial Notice and the Summary Plan Description (SPD).
Election Notice:
- Currently, employers have 30 days to notify the plan administrator of a qualifying event. Plan administrators then have 14 days after they are notified of a qualifying event to provide a COBRA Election Notice to the qualified beneficiary. The DOL has reaffirmed its position that employers serving as the plan administrator have 44 days (the 30 days plus the 14 days) to provide a COBRA Election Notice.
- The DOL has also proposed additional content requirements for the Election Notice (DOL’s Model Election Notice is attached, as well as a bulleted list of the
content requirements).
New Notices:
The DOL has also introduced a requirement for two additional notices:
- Employers must notify individuals who are not eligible for COBRA within 14 days of receiving a COBRA election from those individuals.
- Employers must notify individuals when their COBRA coverage is being terminated earlier than the full COBRA period.
- RSI Gallagher has attached two examples of these new notices, although no models were provided from the DOL.
WHAT SHOULD YOU DO?
- The DOL’s proposed regulations have not yet been made final. It is anticipated that the new COBRA regulations will be made final in early 2004. Once the regulations are made final, you will have a six-month window to finalize your COBRA administration material and procedures.
- Be prepared to begin using the DOL’s Model Initial & Election Notices. The models provided by the DOL will still need to be customized to reflect each employer’s individual information.
- If you are still using the out-dated 1986 Initial Notice from the DOL, begin using the new model immediately.
- Be prepared to incorporate the two new notices (ineligibility for COBRA and early termination of COBRA) into your COBRA administration procedures.
- Begin sending the COBRA Initial Notice to employees’ homes, if you are not already doing so, to ensure proper notification to the spouse. Send notice to the spouse’s address if different from the employee’s. Make sure this notice is being sent within 90 days of the date coverage begins.
- Update your SPD to describe the above changes in COBRA administration.
Download these important documents:
COBRA CONTINUATION COVERAGE ELECTION NOTICE
Notice of Ineligibility for COBRA Continuation Coverage Because of Gross Misconduct
New COBRA Requirements Proposed by DOL- Effective 1/1/04
COBRA CONTINUATION COVERAGE TERMINATION
MODEL GENERAL NOTICE OF COBRA CONTINUATION COVERAGE RIGHTS (For use by single-employer group health plans) |
