The Con­sol­i­dat­ed Omnibus Bud­get Rec­on­cil­i­a­tion Act of 1985 (COBRA) requires group health plans to pro­vide notices to cov­ered employ­ees and their fam­i­lies explain­ing their COBRA rights when cer­tain events occur. The ini­tial notice, also referred to as the gen­er­al notice, com­mu­ni­cates gen­er­al COBRA rights and oblig­a­tions to each cov­ered employ­ee (and his or her spouse) who becomes cov­ered under the group health plan. This notice is issued by the plan admin­is­tra­tor with­in the first 90 days when cov­er­age begins under the group health plan and informs the cov­ered employ­ee (and his or her spouse) of the respon­si­bil­i­ty to noti­fy the employ­er with­in 60 days if cer­tain qual­i­fy­ing events occur in the future.

The ini­tial notice must include the fol­low­ing information:

  • The plan administrator’s con­tact information
  • A gen­er­al descrip­tion of the con­tin­u­a­tion cov­er­age under the plan
  • An expla­na­tion of the cov­ered employee’s notice oblig­a­tions, includ­ing notice of 
    • The qual­i­fy­ing events of divorce, legal sep­a­ra­tion, or a dependent’s ceas­ing to be a dependent
    • The occur­rence of a sec­ond qual­i­fy­ing event
    • A qual­i­fied beneficiary’s dis­abil­i­ty (or ces­sa­tion of dis­abil­i­ty) for pur­pos­es of the dis­abil­i­ty extension)
  • How to noti­fy the plan admin­is­tra­tor about a qual­i­fy­ing event
  • A state­ment that that the notice does not ful­ly describe con­tin­u­a­tion cov­er­age or oth­er rights under the plan, and that more com­plete infor­ma­tion regard­ing such rights is avail­able from the plan admin­is­tra­tor and in the plan’s sum­ma­ry plan descrip­tion (SPD)

As a best prac­tice, the ini­tial notice should also:

  • Direct qual­i­fied ben­e­fi­cia­ries to the plan’s most recent SPD for cur­rent infor­ma­tion regard­ing the plan administrator’s con­tact information.
  • For plans that include health flex­i­ble spend­ing arrange­ments (FSAs), dis­close the lim­it­ed nature of the health FSA’s COBRA oblig­a­tions (because cer­tain health FSAs are only oblig­at­ed to offer COBRA through the end of the year to qual­i­fied ben­e­fi­cia­ries who have under­spent accounts).
  • Explain that the spouse may noti­fy the plan admin­is­tra­tor with­in 60 days after the entry of divorce or legal sep­a­ra­tion (even if an employ­ee reduced or elim­i­nat­ed the spouse’s cov­er­age in antic­i­pa­tion of the divorce or legal sep­a­ra­tion) to elect up to 36 months of COBRA cov­er­age from the date of the divorce or legal separation.
  • Define qual­i­fied ben­e­fi­cia­ry to include a child born to or placed for adop­tion with the cov­ered employ­ee dur­ing a peri­od of COBRA con­tin­u­a­tion coverage.
  • Describe that a cov­ered child enrolled in the plan pur­suant to a qual­i­fied med­ical child sup­port order dur­ing the employee’s employ­ment is enti­tled to the same COBRA rights as if the child were the employee’s depen­dent child.
  • Clar­i­fy the con­se­quences of fail­ing to sub­mit a time­ly qual­i­fy­ing event notice, time­ly sec­ond qual­i­fy­ing event notice, or time­ly dis­abil­i­ty deter­mi­na­tion notice.

Prac­ti­cal­ly speak­ing, the ini­tial notice require­ment can be sat­is­fied by includ­ing the gen­er­al notice in the group health plan’s SPD and then issu­ing the SPD to the employ­ee and his or her spouse with­in 90 days of their group health plan cov­er­age start date.

If the plan doesn’t rely on the SPD for fur­nish­ing the ini­tial COBRA notice, then the plan admin­is­tra­tor would fol­low the U.S. Depart­ment of Labor (DOL) rules for deliv­ery of ERISA-required items. A sin­gle notice addressed to the cov­ered employ­ee and his or her spouse is allowed if the spouse lives at the same address as the cov­ered employ­ee and cov­er­age for both the cov­ered employ­ee and spouse start­ed at the time that notice was pro­vid­ed. The plan admin­is­tra­tor is not required to pro­vide an ini­tial notice for dependents.

By Danielle Capilla
Orig­i­nal­ly Post­ed By