Smart Benefits: New COBRA Notices a Good Reminder To Brush Up on Compliance

Monday, February 24, 2020

Rob Calise, GoLocalWorcester Business/Health Expert

Rob Calise

With the spike in employer compliance enforcement, it’s no surprise that employers who fail to provide proper COBRA notices – for continuation coverage – are being targeted as well. With the Department of Labor recently announcing updated versions of its model COBRA General Notice and model COBRA Election Notice, which have an updated expiration date of January 31, 2023, now’s a good time to make sure you’re providing notifications in a timely manner. Here’s what you need to know about COBRA compliance.

Covered Businesses

COBRA generally applies to all private-sector group health plans maintained by employers with at least 20 employees on more than 50 percent of its typical business days in the previous calendar year. Both full- and part-time employees are counted to determine whether a plan is subject to COBRA. COBRA also applies to plans sponsored by state and local governments.1

Entitled Employees

A group health plan must offer COBRA continuation coverage only to qualified beneficiaries and only after a qualifying event has occurred. Generally speaking, a qualified beneficiary is an employee who was covered by a group health plan on the day before a qualifying event occurred or that employee’s spouse, former spouse, or dependent child. Qualifying events are those that cause an individual to lose group health coverage. The type of qualifying event determines who the qualified beneficiaries are and the period of time that a plan must offer continuation coverage.

Notice Procedures

Group health plans must provide covered employees and their families with specific documents. Required notices include:

Summary Plan Description: The COBRA rights provided under the plan, like other important plan information, must be described in the plan’s Summary Plan Description (SPD).
General Notice: Group health plans must give each employee and spouse a general notice describing COBRA rights within the first 90 days of coverage.
Qualifying Event Notice: The employer, employee or beneficiary must notify the group health plan of the qualifying event. Who must give notice depends on the type of qualifying event.
Election Notice: After receiving notice of a qualifying event, the plan must provide qualified beneficiaries with an election notice within 14 days that describes their rights to continuation coverage and how to make an election.
Notice of Unavailability of Continuation Coverage: If a group health plan denies a request for continuation coverage or for an extension of coverage because the requester is not entitled to receive it, the plan must give the denied individual a notice of unavailability of continuation coverage within 14 days after the request is received.
Notice of Early Termination of Continuation Coverage: While continuation coverage must generally be available for a maximum period, a group health plan may terminate coverage early for specific reasons. In these cases, the plan must give the qualified beneficiary a notice of early termination as soon as practicable after the decision is made.

Benefits

COBRA sets standards for the continuation coverage that plans must provide. Specifically, the continuation coverage must be identical to the coverage currently available under the plan to similarly situated individuals who are not receiving continuation coverage.

Duration

COBRA requires that continuation coverage extend from the date of the qualifying event for a limited period of 18 or 36 months. When the qualifying event is the covered employee’s termination of employment (for reasons other than gross misconduct) or reduced work hours, beneficiaries must be eligible for 18 months. When the qualifying event is the end of employment or reduction of the employee’s hours, and the employee became entitled to Medicare less than 18 months before the event, COBRA coverage for the employee’s spouse and dependents must be available for up to 36 months after the employee becomes entitled to Medicare.

Rob Calise is the Managing Director, Employee Benefits of The Hilb Group of New England, where he helps clients control the costs of employee benefits by focusing on consumer-driven strategies and on how to best utilize the tax savings tools the government provides. Rob serves as Chairman of the Board of United Benefit Advisors, and is a board member of the Blue Cross & Blue Shield of RI Broker Advisory Board, United HealthCare of New England Broker Advisory Board and Rhode Island Business Healthcare Advisors Council. He is also a member of the National Association of Health Underwriters (NAHU), American Health Insurance Association (AHIA) and the Employers Council on Flexible Compensation (ECFC), as well as various human resource associations. Rob is a graduate of Bryant University with a BS in Finance