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DOL Issues Final COBRA Notice Rules

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in Human Resources

The Department of Labor (DOL) issued final notice rules under the Consolidated Omnibus Budget Reconciliation Act (COBRA), which contain changes to notice requirements that have been slightly altered from the proposed rules.


Model General Notice: The DOL moved the plan-specific identification information to the end of the document. It also eliminated some content requirements, e.g., identification of both the plan administrator and the COBRA administrator; a description of how qualified beneficiaries must provide notice of a second qualifying event; and the reference to COBRA coverage beginning dates.

 

Model Election Notice: The DOL eliminated the requirement that information be provided concerning alternative coverage and conversion rights. The Department of Labor also eliminated a potential clerical headache. The proposed rules required employers to list the names of qualified beneficiaries on election notices. In the final rules, they can refer to qualified beneficiaries by status (e.g., employee, spouse, or dependent child covered under the plan prior to the qualifying event) or by name. In addition, the DOL modified language in the optional Trade Act paragraph to include a reference to retired employees who are receiving pension payments from the Pension Benefit Guaranty Corporation.

 

There's another change involving both notices. An employer doesn't have to furnish a General Notice if it is required to furnish an Election Notice during the 90-day General Notice period.

 

Other Changes

The Department of Labor made changes and clarifications to other sections of the proposed rules as well. However, the section on Notice Requirements for Employers was untouched.

 

Qualified Beneficiaries' Notice: The DOL modified the default standard that applies if a plan does not adopt reasonable procedures for employees to provide notice of a qualifying event. In such a scenario, workers must be allowed to provide oral or written notice of a qualifying event to the person or department that handles health benefits or to the insurance company. The DOL eliminated a confusing reference found in the proposed rules that allowed such notice to be made to "any officer of the employer."

 

A minimum 60-day time limit was established in the proposed regulations for qualified beneficiaries to provide notice of a qualifying event. The Department of Labor restructured language in the final regulation to conform with Treasury regulations. The 60-day period begins to run from the latest of: (1) the date of the qualifying event; (2) the date on which there is a loss of coverage; or (3) the date on which the qualified beneficiary is informed through the plan's SPD or the general COBRA notice of his/her obligation to provide notice and the procedures for providing such notice.

 

The timing of qualified beneficiaries' notice of a disability was changed to reflect Treasury regulations. Under the final rule, a plan may require beneficiaries to provide a disability notice within 60 days after the latest of: (1) the date of the disability determination by the Social Security Administration; (2) the date on which the qualifying event occurs; (3) the date on which the qualified beneficiary loses coverage; or (4) the date on which the qualified beneficiary is informed of the obligation to provide the disability notice.

 

Unavailability Notice: Apparently, commentators had a lot of questions about when plan administrators had to send this notice. The DOL clarified that the notice must be sent when the plan administrator denies coverage after receiving a qualified beneficiary notice, regardless of the basis of the denial, and regardless of whether the notice involves a first qualifying event, a second qualifying event, or a request for a disability extension.

 

Delivery Issues: Some delivery issues were clarified in the preamble of the final rule.

  • Employers are not required to furnish a General Notice to dependent children, even if the notice requirement is triggered early by a qualifying event involving the dependent.

  • A required notice generally is considered "furnished" by a plan administrator as of the date of mailing, if mailed by first class mail, certified mail, or Express Mail; or as of the date of electronic transmission, if transmitted electronically. 

  • If hand delivered, the notice would not be considered furnished until actually received by the individual to whom the notice is directed. Note that hand-delivery to the employee does not constitute delivery to the spouse.

Use this link to view the DOL's final COBRA notice rules.

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