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Whip your COBRA notices into shape for the new year

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in Employment Law,Human Resources

Issue: If your health plan operates on a calendar-year basis, it must meet new COBRA notification rules starting Jan. 1.

Risk: Using outdated notices could result in fines up to $110 per violation, per day. Plus, it could spark an employee lawsuit.

Action: Incorporate the new notices by Jan. 1 or check to make sure your third-party vendor is doing so.

If your organization offers health insurance, next month you must start giving employees and their families more specifics on their rights under the COBRA continuing insurance law.

The U.S. Labor Department published long-awaited final regulations last May that set new minimum standards for the content and timing of COBRA notices sent by employers. The new rules take effect on the first day of your plan year after Nov. 26, 2004. For plans that operate on a calendar-year basis, that means Jan. 1, 2005, is the effective date.

The law: You must give notice of COBRA rights at two points:

1. Provide a "general notice" once employees become covered under the plan (within 90 days of coverage).

2. Provide an "election notice" when employees experience a "qualifying event" that triggers COBRA coverage (termination, reduction in work hours, divorce, etc.).

The Labor Department provides sample general notices and election notices that your organization can modify and use. These sample notices replace 18-year-old versions. You can find them at the agency's Web site: www.dol.gov/ebsa/compliance_ assistance.html#section2.

The new rules also require you to provide two new notices:

1. Issue an early-termination notice "as soon as practicable" once you determine that a COBRA recipient's coverage will end before the maximum eligibility period.

2. Issue an unavailability notice within 14 days to employees (or beneficiaries) once they're deemed ineligible for COBRA.

Advice: If you haven't done so yet, revise your COBRA notices to incorporate these new changes, or make sure your third-party vendor is doing so. Most employers should simply adopt the model notice forms. But those notices may require some tailoring to reflect your plan. Also, make sure your summary plan description conforms with these new changes.

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