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Revamp your COBRA notices; Labor floats new rules

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You and your health plan administrator will have to provide more specifics on COBRA rights to employees under new rules proposed by the U.S. Labor Department. The proposed rules, which would take effect for plan years beginning after Jan. 1, 2004, include two new notice requirements that more fully explain when COBRA coverage ends early and when an employee (or beneficiary) is ineligible for coverage.

The long-awaited rules clarify the minimum standards for COBRA's notices, plus provide sample notices that employers can modify and use. The Labor Department is seeking comments on the sample notices, which replace 17-year-old examples.

Our advice: Incorporate the new notices now, or make sure your third-party vendor is aware of these new requirements. Reason: Labor says it will no longer consider your use of the outdated notices to be in "good-faith compliance" with COBRA's requirements.

Among the other requirements, you (or your plan administrator) must give an initial COBRA notice to employees and their spouses within 90 days after coverage starts. Plus, you must have "reasonable" procedures for notifying beneficiaries of certain events (such as divorce) that would make the beneficiary ineligible for COBRA.

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.

To read a fact sheet on the new rules, go to fs052803.html. You can comment on the new rules until July 28. To do so, visit, put "COBRA" in the keyword search and click on the May 28 regulation

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