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Revamp your COBRA notices; feds float new rules

by on
in Employment Law,Human Resources

Issue: New Labor Department proposals add paperwork burden.

Risk: Using outdated COBRA notices puts you on the government's hit list, resulting in fines up to $110 per violation, per day. Plus, such errors could set you up for an employee lawsuit.

Action: Incorporate new notices or check whether third-party vendor is doing so.

If your company offers health insurance, you must soon start giving employees and their families more specifics on their rights to continuing it under COBRA.

A new U.S. Labor Department proposal, which would take effect for plan years beginning after Jan. 1, 2004, clarifies the minimum standards for COBRA notices. It provides sample notices that your company can modify and use. These sample notices replace 17-year-old versions.

Plus, Labor's proposal would add two new notice requirements. One would more fully explain when COBRA coverage ends early. The other would explain when an employee (or beneficiary) is ineligible for coverage.

Why the new rules? The government estimates that 50,000 people a year miss the chance to take COBRA coverage because they weren't notified.

Advice: Incorporate the new notices now, or make sure your third-party vendor is aware of them. Reason: Starting next year, Labor no longer will consider your use of the outdated notices as being in "good-faith compliance" with COBRA rules.

To read a fact sheet on the new rules, go to www.dol.gov/ebsa/newsroom/ fs052803.html.

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