What Is It?
The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires that group health plans notify each participant and beneficiary of their COBRA continuation coverage rights.
What Employers and Plans Must Provide It?
COBRA's continuation coverage and notice requirements apply to nearly every group health plan sponsored by an employer with 20 or more employees on at least 50 percent of its typical business days during the preceding calendar year. Each group health plan subject to COBRA must provide a notice. It is not required that each group health plan provide a separate notice, so long as the notice clearly establishes which group health plans the notice concerns.
Types of Plans that Must Provide the Notice
COBRA continuation coverage and notice requirements must be fulfilled for all group health plans sponsored by an employer subject to COBRA. A "group health plan" under COBRA includes any employer-sponsored benefit that has any component of medical care—that is, any coverage of diagnostics or treatment of disease. Examples include:
Wellness programs with health risk assessments or biometrics
Healthcare flexible spending arrangements (FSAs)
Health reimbursement arrangements (HRAs)
Expatriate medical plans (unless sponsored by an employer domiciled in a foreign country and the plan primarily covers foreign nationals and third-country nationals)
Accident, hospital and other indemnity plans that provide benefits resembling medical coverage (e.g., $25 per day for an x-ray)
Traditional medical, dental and vision coverage
Important Exemption for Church Plans
COBRA does not apply to church plans or plans sponsored by church-affiliated organizations. ("Church plan" and "church-affiliated organization" are very technical terms. Get help if there's any question about whether a plan sponsor is a church or church-affiliated organization under ERISA.) Thus, there's no notice requirement for church plans.
What Must the Notice Say?
DOL has published a model initial rights notice that employers may rely on, which is available here, but the model notice does not adequately protect employers, and with respect to certain complicated subjects (like second qualifying events) it is confusing. Many employers and most third-party COBRA administrators have developed their own notices. Here is a checklist of content requirements you can use when reviewing your company's or your TPA's initial rights notice. If you would like assistance developing or reviewing a COBRA initial rights notice, ask your broker-consultant or give us a holler.
Plan name
Plan contact information (title, address and phone number to contact for more information about the plan, not COBRA continuation coverage)
General description of COBRA continuation coverage (the model notice does a decent job on this subject)
Description of covered person's obligation to give notice of divorce, legal separation, and a dependent ceasing to be a dependent under the terms of the plan. The description should include:
the period of time for covered person to give notice period following the event (no more than 60 days)
contact information for where and to whom the covered person's notice must be given
any required procedures for the covered person's giving notice, including any required information or specific documentation
Disability notice requirements and plan procedures, including any deadlines
Current address advisory (e.g., "It's important that you keep the plan administrator informed of your current address.")
Summary-only advisory (e.g., "This notice is a summary only. See the plan documents for complete COBRA continuation coverage information.")
COBRA administrator contact information (title, address and phone number to contact for more information about COBRA continuation coverage, specifically)
Healthcare FSA-specific COBRA language limiting COBRA to underspent accounts and then only through the end of the then-current FSA coverage period
The consequences of late notice (i.e., that the covered person will forfeit his/her COBRA continuation coverage rights)
Who Must Get the Notice?
COBRA regulations require that the initial rights notice be supplied to each covered employee and any spouse of the employee. DOL regulations do permit employers to send a single notice to employees and spouses living at the same address. The "same address" rule does not apply to electronic delivery because spouses rarely share a personal email address and never an employer-provided email address.
When Must the Notice Be Provided?
Generally, the COBRA initial rights notice must be given within 90 days of the date the employee or spouse begins plan coverage. The statute states that the initial notice must be given "at the time of commencement of coverage under the plan;" it is not clear whether COBRA permits notice during open enrollment or the new hire process—that is, before commencement of coverage.
How May the Notice Be Distributed?
The COBRA initial rights notice must be provided in a manner reasonably calculated to ensure delivery to employees entitled to receive it, which is DOL-speak for US Mail, courier or electronic delivery under the DOL's electronic delivery safe harbor rules. (More on the DOL electronic delivery safe harbor is below.) The notice need not be sent by itself; it may be included with other notices, such as with other open enrollment materials.
Caution Regarding Notice to Spouses
In order to enforce a covered person's notice deadlines (such as the deadline for an employee or spouse to notify the plan of divorce, disability, etc.), the plan must prove that it provided the person with the initial rights notice. Notice to the employee generally is not effective notice to the spouse. Notice to the employee is only effective as notice to the spouse if the initial rights notice is mailed and the employee and spouse reside at the same mailing address. This makes electronic delivery very unattractive for providing notices to spouses. Providing effective electronic delivery of notices to spouses would require employers to obtain affirmative consent and personal email addresses from spouses.