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Notice Requirements Under COBRA: Check it Twice!
The beginning of the New Year (and a new plan year for many public agencies) is a good time to review key provisions of the Comprehensive Omnibus Budget Reconciliation Act (“COBRA”), including what notice requirements COBRA imposes on public agencies.
This year, make a resolution to ensure that your public agency fully complies with COBRA by following the guidance in this post. Educate your Human Resources staff about the law to equip them with the knowledge to respond quickly, confidently and accurately to questions that your public agency employees may have about their obligations and rights under COBRA.
What is COBRA and Who is Eligible?
COBRA is a federal law that provides for the continuation of group health plan benefits to “covered employees” (i.e., employees who elect group health plan coverage) and “qualified beneficiaries” (i.e., the spouses and dependents of covered employees) under certain circumstances when the health coverage would otherwise be lost. Generally, COBRA permits continued coverage under the group health plan for eighteen (18) months, but under certain circumstances, the coverage period may be extended.
General Notice Requirements for Agencies that Serve as Plan Administrators
Many public agencies also serve as administrators for their group health care plans. In such circumstances, COBRA requires that the public agency provide a written general notice of COBRA rights to each covered employee and spouse within ninety (90) days of the commencement of their coverage. These public agencies must also send this notice to any new dependents who join the plan after the covered employee’s enrollment in COBRA.
The general notice must include the following information: (1) a summary plan description; (2) a list of individuals who can become qualified beneficiaries under the plan; and (3) an explanation of the qualified beneficiaries’ obligations when a qualifying event under COBRA occurs. The Department of Labor has a COBRA Model General Notice that public agencies may use to meet this general notice obligation.
These public agencies may provide a single general notice to a covered employee and his or her spouse if they reside at the same address. However, agencies should note that delivery of the notice to an employee at work does not constitute delivery to the spouse, so they will need to provide a separate notice to the spouse.
Procedure for Employees to Notify the Plan Administrator of a “Qualifying Event”
In addition to general notice requirements, a public agency that serves as a plan administrator must also establish in the summary plan description a procedure by which covered employees and qualified beneficiaries can provide notice to the plan administrator in the event they experience a “qualifying event.” These public agencies may require employees and beneficiaries to use a standard form. However, the form must be readily available and provided without cost.
What are “Qualifying Events”?
“Qualifying events” are events that would otherwise cause a covered employee or qualified beneficiaries to lose health coverage. The following events constitute “qualifying events” for covered employees if they would cause the employee to lose coverage under the group health plan:
- Termination for any reason other than gross misconduct; and
- Reduction in hours worked.
In addition to those events described above, which also constitute “qualifying events” for qualified beneficiaries, the following events constitute “qualifying events” for the qualified beneficiaries separate from the covered employee:
- Covered employee becomes entitled to Medicare;
- Divorce or legal separation of the spouse from the covered employee; and
- Death of the covered employee.
The occurrence of one of these “qualifying events” triggers an obligation for the covered employee or qualified beneficiary to notify the public agency.
Unless the group health plan provides a more liberal policy, covered employees and qualified beneficiaries must provide notice to the public agency of the occurrence of a “qualifying event” within sixty (60) days.
Election Notice after a “Qualifying Event”?
If the agency does not serve as the plan administrator, the agency must notify the plan administrator of the occurrence of a “qualifying event” within thirty (30) days after it receives notice. The plan administrator will then notify the beneficiaries of their respective rights under the Act to elect to continue coverage under the group health plan.
For a public agency that also serves as a plan administrator, COBRA requires that the public agency notify beneficiaries of their election rights. Such an agency must provide election notice to the covered employee and/or qualified beneficiary within fourteen (14) days of receiving notice that a “qualifying event” has occurred.
For each of the common “qualifying events”, identified above, we now indicate the proper recipients of election notices:
- Termination for any reason other than gross misconduct requires notice to the former employee and qualified beneficiaries;
- Reduction in hours worked requires notice to the employee and qualified beneficiaries;
- Covered employee becomes entitled to Medicare requires notice to the employee and qualified beneficiaries;
- Divorce or legal separation of the spouse from the covered employee requires notice to the employee’s former spouse and qualified beneficiaries; and
- Death of the covered employee requires notice to the deceased employee’s spouse and surviving and qualified beneficiaries.
The provision of election notice to a covered employee and/or qualified beneficiary discharges the agency’s COBRA notice requirements. Thereafter, the agency and its staff may continue to work with the employee, his/her spouse and dependents to decide whether to continue to receive coverage under the group health plan under COBRA.
This article was originally published on LCW’s California Public Agency Labor & Employment Blog. You can read other articles and explore our blog by visiting calpublicagencylaboremploymentblog.com.