The COBRA provisions generally require group health plans to provide participants and beneficiaries who would lose coverage under certain circumstances (qualified beneficiaries) the opportunity to elect to continue coverage under the plan at group rates for a limited period of time. The final rules set minimum standards for the timing and content of the notices required under the continuation coverage provisions and establish standards for administering the notice process. These rules affect administrators of group health plans, participants and beneficiaries (including qualified beneficiaries) of group health plans, and the sponsors and fiduciaries of such plans. These rules also provide model notices for use by administrators of single-employer group health plans to satisfy their obligation to provide general notices and election notices.

The final COBRA notice rules consist of four separate regulations.

1. The general notice of continuation coverage requirement. In an appendix to § 2590.606–1, a model general notice is provided to facilitate compliance with the general notice requirements.
   DOL retained the 90-day requirement to provide an initial general notice, but clarified the notice is to be provided at the time of commencement of coverage under the plan;
   The general notice must be written in a manner to be understood by the average plan participant;
   The general notice must meet the content requirements as listed in the final rule; and
   A single notice addressed to a covered employee and covered spouse is usually sufficient provided they reside at the same location. There is no requirement to provide a separate notice to dependent children who share a residence with the employee or spouse when the general notice was provided in accordance with notice requirements.

2. Notice requirement for employers. Section 2590.606–2 creates rules for employer-provided notices of the occurrence of a qualifying event. These COBRA rules require employers to provide notice to the administrator of the plan of the occurrence of a qualifying event that is the employee’s death, termination of employment (other than by reason of gross misconduct), reduction of hours, Medicare entitlement of the covered employee, and certain bankruptcy proceedings. The notice must include sufficient information to enable the plan administrator to determine the applicable plan, the covered employee, the qualifying event and the date of the qualifying event. The notice must be provided not later than 30 days after the date of the qualifying event.

3. Notice requirements for covered employees and qualified beneficiaries. Section 2590.606–3 addresses the responsibilities of qualified beneficiaries to provide notice of a qualifying event or a disability. These include notices of qualifying events for:
   a divorce or legal separation of the covered employee from his or her spouse;
   a dependent child ceasing to be covered as a dependent under the plan;
   second qualifying events after a qualified beneficiary has become entitled to continuation coverage with a maximum of 18 (or 29) months;
   a qualified beneficiary's entitlement to receive continuation coverage with a maximum duration of 18 months after disability has been determined by the Social Security Administration (SSA); and
   the end of a disabled qualified beneficiary's disability as determined by the SSA.

   The final regulations require plans to establish reasonable procedures for qualified beneficiaries to use when notifying the plan administrator. The specific requirements for these procedures must be disclosed in the plan's summary plan description (SPD). The rule outlines specific requirements regarding the contents of the notice.

   The final rule also specifies time limits by which covered employees and qualified beneficiaries must notify the plan administrator of qualifying events. The period of time for furnishing a notice may not end before the date that is 60 days after the latest of:

   the date on which the relevant 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 of both the responsibility to provide the notice and the plan’s procedures for providing such notice to the administrator.

   Additionally, there are special time limits for notice of disability determinations. The period of time for furnishing the notice may not end before the date that is 60 days after the latest of:

   the date of the disability determination by the SSA;
   the date on which a 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 the SPD, of both the responsibility to provide the notice and the plan’s procedures for providing such notice to the administrator. A plan may require the notice to be furnished before the end of the first 18 months of continuation coverage.

   The final rule also addresses time limits for notice of change in disability status. The period of time for furnishing the notice may not end before the date that is 30 days after the latest of:

   the date SSA determines the qualified beneficiary is no longer disabled; or
   the date the qualified beneficiary is informed through the SPD or the general notice of the plan’s procedures for providing such notice to the administrator.

4. Notice requirements for plan administrators. Section 2590.606–4 deals with the election notice and other notices that plan administrators must provide. A model election notice is provided to facilitate compliance with the election notice requirements. Reasonable procedures must be established for providing COBRA election notices. The election notice must contain the 14 items detailed in the final rule. As with the general notice, the election notices must be written in a manner that is to be understood by the average plan participant. Election notices must be furnished to each qualified beneficiary, except that a single notice may be provided to:
   a covered employee and spouse residing at the same address; or
   the covered employee or spouse for each dependent child residing at the same address.

   An incomplete election notice cannot be rejected as untimely if it is provided within the plan's time limits and has sufficient information. However, nothing precludes a plan from rejecting a notice when the requested additional information is not provided within some reasonable period of time.

   Two (2) new notice requirements for plan administrators were retained in the final COBRA rule.

   The notice of unavailability requires plan administrators to provide this notice within 14 days after receiving any notice from a covered employee or qualified beneficiary that is a notice of qualifying event, second qualifying event, or determination of disability, if the plan decides to either deny COBRA coverage or deny an extension of the maximum COBRA coverage period. For example, the unavailability notice would be required to be provided when a plan administrator denies continuation coverage because it has been determined that no qualifying event had occurred or because the qualified beneficiary did not furnish the notice of qualifying event notice in a timely manner or did not provide complete information.

   The notice of termination requires plan administrators to provide this notice to qualified beneficiaries when COBRA terminates earlier than the maximum period of COBRA applicable to the qualifying event. This notice must be provided "as soon as practicable following the administrator's determination that continuation coverage shall terminate" and contain the following:

   the reason that continuation coverage has terminated earlier than the maximum period triggered by the qualifying event;
   the date of termination of continuation coverage; and
   any rights the qualified beneficiary may have under the plan or under applicable law to elect alternative group or individual coverage, such as a conversion right.

   The model notices provided in the appendices to §§ 2590.606–1 and 2590.606–4 are intended to be used by single-employer plans. Other types of plans, such as multiemployer plans and plans sponsored by unions for their members, would have to modify the model notices to reflect the special rules or practices that apply to such plans. The DOL further notes that the use of the model notices is not required. The model notices included with the regulations are provided solely for the purpose of facilitating compliance with the applicable notice requirements. The furnishing of appropriately and accurately completed model notices, however, will be considered by the DOL to constitute compliance with the requirements of the applicable notice regulation. The DOL has not provided model notices of unavailability or termination.

We are currently comparing the final COBRA regulations to the existing continuation coverage language contained in our health plan documents / summary plan descriptions (e.g., our self-funded health plans and cafeteria plans). We will inform all Relius Documents customers of any language changes and the format in which these changes will be made available upon completion of the review.

You may view the complete text of the regulation including the model notices by clicking on the following link:

www.dol.gov/ebsa/regs/fedreg/final/2004011796.htm