The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires that group health plans (GHPs) offer continued coverage to covered employees, former employees, spouses, former spouses, and dependent children when coverage would otherwise be lost due to “qualifying events.” These events include the death of a covered employee, job loss (except due to gross misconduct), reduced hours worked, divorce, legal separation, entitlement to Medicare under Title XVIII of the Social Security Act, a loss of dependent eligibility status, or certain bankruptcy proceedings under Title 11. Employers with 20 or more employees must ensure that employees and qualified beneficiaries receive continued health coverage that is equivalent to what is offered to a similarly situated individual under the plan.
COBRA imposes several notice requirements. These include an initial notice, qualifying event notice, election notice, a denial notice, and an early termination notice.
The initial COBRA notice must be provided within the first 90 days of coverage and detail the COBRA-related rights available to an employee and their spouse. The notice must include the name of the plan; the contact information for someone knowledgeable about COBRA and the plan; a general description of the continued coverage; instructions on how to notify the plan of qualifying events or disabilities; the importance of keeping the plan administrator informed of current addresses; a disclaimer that the general notice does not fully describe COBRA or the plan; and a statement that more information is available from the plan administrator and in the Summary Plan Description (SPD).
Plans must establish procedures for how an employee or qualified beneficiary may give notice of a qualifying event. Multiemployer Plans have more flexibility regarding the receipt of a qualifying event notice compared to other plans. They may set their own timeline for receiving notice and can shift the responsibility of determining whether a qualifying event has occurred from the employer, employee, or beneficiary to the plan administrator. Any such procedure must be clearly stated in the SPD. Regardless of the plan type, the time limit for giving notice must be at least 60 days from the latest of: the date the qualifying event occurs; the date coverage is lost (or would be lost) under the plan due to the qualifying event; or the date the qualified beneficiary receives the SPD or COBRA general notice, informing them of the procedures for notifying the plan of such an event and their responsibility to do so. The plan must detail how and to whom notice should be given, and what information must be included. If an individual submits notice of a qualifying event, the notice applies to all qualified beneficiaries affected. For multiemployer plans, notice may also be sent to the joint board of trustees or, when applicable, to the insurance company. In cases of divorce, legal separation, or a dependent losing eligibility status, the employee or beneficiary must notify the plan.
Once the plan receives notice of a qualifying event, it must send the qualified beneficiaries an election notice within 14 days. The notice must describe their rights to continued coverage and how to make the election. Multiemployer Plans may establish different timing requirements for sending the election notice, but any variation must be disclosed in the SPD. The notice must include the plan name; the contact information for the plan’s COBRA administrator; identification of the qualifying event and any qualified beneficiaries (either by name or status); a statement of the right to elect continued coverage; the coverage termination date if continued coverage is not elected; instructions for electing continued coverage; consequences of failing to elect or waiving continued coverage; a description of the available continued coverage, its duration, and potential extensions for disability or a second qualifying event; conditions for early termination; premium payment requirements, including due dates and grace periods; a statement regarding the importance of keeping the plan administrator up to date on current addresses; a disclaimer that the election notice does not fully describe COBRA or the plan; and a reminder that more information is available from the plan administrator and the SPD.
If a request for continued coverage or an extension is denied, the plan must send a written denial notice within 14 days of receiving the request, to the affected employee or qualified beneficiary, explaining the reason for the denial. Additionally, if continued coverage will terminate early, the employer must notify the affected individual as soon as practicable. This notice must explain the termination date, the reason for termination, and any rights the qualified beneficiary may have to other coverage under the plan or applicable law.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) establishes important protections for employees, former employees, spouses, former spouses, and dependent children by allowing them continued access to group health plan (GHP) coverage after a “qualifying” life event that would otherwise result in a loss of coverage. To ensure that these rights are upheld, COBRA imposes requirements on employers, GHPs, employees, and qualifying beneficiaries regarding the timing and content of various notices. These timely notices assist employees and qualifying beneficiaries in making informed and critical decisions regarding continued health coverage. If employers and plan administrators do not fully understand or properly disclose such timely notices, this could affect the plan’s assets and the ability of the employees or qualified beneficiaries to exercise their rights under COBRA.