The Consolidated Omnibus Budget Reconciliation Act (COBRA) was passed in 1986 to provide opportunity for continuation of group health coverage that would otherwise be terminated when a worker loses their job. The law covers group health plans maintained by employers with 20 or more employees. It applies to private sector plans as well as those sponsored by state and local governments. The only organizations with 20 or more employees whose plans aren’t covered by this law are those sponsored by the Federal government and certain church-related organizations.
The law provides for six types of continuation coverage notices that employers must comply with:
- General COBRA Notice — A general written notice of COBRA rights and responsibilities must be given to each covered employee and spouse, if applicable, within 90 days of the date the individual first becomes eligible for coverage. It must contain the name of the plan and the name, address, and telephone number of the person who can provide more information about the plan. It must explain the plan’s requirements regarding the responsibility to notify the plan administrator of certain qualifying events and the necessity for keeping the administrator informed of address changes for participants and beneficiaries. It should also contain a statement that the general notice does not provide a full coverage description and that more information is available from the plan administrator and in the Summary Plan Description.
- Employer’s Notice of Qualifying Event to Plan Administrator — The employer must notify the plan administrator in the event of qualifying events such as a covered employee’s death, termination of employment for any reason other than gross misconduct, reduction in hours, Medicare entitlement, or Chapter 11 bankruptcy proceeding. If loss of coverage occurs on the date the qualifying event occurs, the notice must be given within 30 days of the qualifying event. If loss of coverage occurs after the qualifying event, the notice must be given within 30 days after the loss of coverage.
- Qualified Beneficiaries Notice of Qualifying Event — A covered employee/qualified beneficiary may be required to notify the plan administrator about certain qualifying events such as a divorce or legal separation that results in a loss of coverage, a child’s loss of dependent status, a second qualifying event, or Social Security Administration determination of disability. In general, such notice should be provided within 60 days of the later of the qualifying event date or the loss of coverage due to the qualifying event. Plans must establish reasonable procedures for the furnishing of the listed notices to the plan administrator.
- Election Notice — The plan administrator must provide a written election notice to each qualified beneficiary within 14 days of receipt of a qualifying event notice or 44 days of the qualifying event if the employer is also the plan administrator. This notice must outline specific information as demonstrated by the Department of Labor’s model election notice.
- Unavailability Notice — If the plan administrator receives a notice of a qualifying event, second qualifying event or Social Security disability determination, and determines that the individual is not entitled to continuation coverage, the administrator must give the individual written notice that continuation coverage is unavailable. This notice must explain why the individual is not entitled to continuation coverage. The deadline for this notice is the same as the deadline for sending an election notice.
- Early Termination Notice — A written notice to the individual that continuation coverage will end earlier than the end of the applicable maximum period of continuation coverage. It must explain why coverage is being terminated early, the date of termination, and any rights the individual may have to elect alternative group or individual coverage.