The COBRA continuation of coverage law requires that certain notices be furnished to employees and other qualified beneficiaries by the employer or plan administrator. Because the penalties for noncompliance with the COBRA notice requirements can be costly, following the requirements for furnishing — that is, delivering — the necessary notices is an important part of COBRA administration.
COBRA notices that the employer or plan administrator must furnish include:
- The initial (or general) notice containing information about COBRA rights and responsibilities, which must be provided to the employee and spouse within 90 days of when the employee first becomes covered under the plan.
- The election notice, which must be provided to qualified beneficiaries within 14 days of the administrator being notified of a COBRA-qualifying event.
- The notice of unavailability of COBRA coverage, provided when the administrator receives notice of a qualifying event from an individual who is not eligible for continuation coverage.
- The notice of termination of COBRA coverage, required when COBRA coverage terminates before the maximum COBRA continuation period.
In providing COBRA notices, the employer or administrator should “use measures reasonably calculated to ensure actual receipt” by the employee, spouse, or other qualified beneficiary. COBRA regulations recognize that notices might be furnished through a number of different methods, including mailing, hand-delivery, and electronic transmission. According to these regulations, a notice is considered furnished as of the date of mailing, if mailed by first class mail, certified mail, or express mail; as of the date of electronic transmission, if the notice is transmitted electronically; or upon receipt by the individual to whom a notice is directed, if the notice is hand-delivered.
In the case of the initial COBRA notice, which must be provided to both the employee and covered spouse, the regulations specify that a single notice may be provided, addressed to both the employee and spouse if, on the basis of the most recent information available to the employer, the employee and spouse reside at the same address. There is no separate notice requirement for dependent children who live with the employee or spouse who receives the notice.
Though the regulations permit the initial notice requirement to be satisfied by including COBRA information in a summary plan description (SPD), since spouses also are entitled to this notice, plans that include the COBRA notice in an SPD and then hand-deliver the SPD to the employee at work will not be considered to have fulfilled the initial notice requirement concerning the spouse. Similarly, delivery of a required notice to an employee’s work e-mail would not meet the requirements when notice also is required for a spouse.
Though the regulations offer several options for delivery of COBRA notices to the required parties, in practice, many employers have opted for delivery by first class mail. First class mail has the advantage of being a reliable method for delivery of items and an accepted business practice. If an employee or other intended recipient raised an improper notice challenge, the employer or administrator would need to prove that it furnished the notice through an acceptable delivery method, not that the employee actually received the notice. Thus, establishing processes for mailing notices and keeping records that such processes were followed are important. For example, obtaining a certificate of mailing (which provides evidence that an item has been presented to the Postal Service for mailing) would establish that the notice was, in fact, mailed. Note that a certificate of mailing differs from certified mail with a return receipt. The latter provides evidence of actual receipt by the addressee, which is not required to show compliance with COBRA notice requirements.
Ensuring correct delivery of the necessary notices, and establishing procedures that show COBRA notices are being furnished as required by law, can help avoid costly compliance challenges.