TAX BREAK

COBRA Strikes Again by Amy Erlbacher-Anderson (continued)

 

COBRA Procedures

 

All health plans are now  required to establish a set of “reasonable” procedures for participants to follow when they provide notice to the employer or plan administrator of qualifying events. The procedures will only be considered reasonable if they are described in the health plan’s SPD and identify to whom and how notice must be sent, describe the information required by the plan to make a determination, and state when such notice is due. 

 

If followed, this rule is advantageous for employers. Not only does the rule set a limit on the amount of time a participant has to make a claim for COBRA after a qualifying event, it also allows the employer to specify the office or person who must receive the notice. This avoids the results of recent court cases where someone unconnected with employee benefits was informed of a qualifying event and the employer was held liable for that knowledge. Lastly, the rule allows the employer to require written notification and to require the use of a notice form. With some exceptions, including allowing the participant an opportunity to provide missing information, if the participant does not follow the procedure, the plan may deny COBRA coverage. 

 

However, if the plan does not adopt a set of procedures and/or include them in the SPD, the advantage of the new rule goes to the participant – any form of written or oral communication that identifies a qualifying event and was reasonably calculated to bring the event to the attention of the office that handles employee benefits is considered adequate notice. 

 

Unavailability Notice

 

The new rules require a health plan administrator to provide a separate notice when COBRA is unavailable within 14 days of receipt of notice of a qualifying event if the participant is not entitled to COBRA. The notice must specifically explain why such coverage has been denied and must be provided regardless of the basis of the denial or the basis of the claim for COBRA. 

 

Early Termination Notice

 

A notice of termination of COBRA must be provided to each qualified beneficiary if COBRA coverage ends earlier than the applicable maximum period of coverage. The notice is required “as soon as reasonably practicable” after the administrator determines COBRA will terminate early and must state that coverage has or will cease, the date coverage will end, why it is terminating early, and whether the individual has any alternative coverage rights. 

 

If you are an employer subject to COBRA, the first step you should take is to talk to your service providers and determine what they will do to assist you in complying with the new COBRA rules. If you have any questions on complying with the new COBRA rules, please feel free to contact me. 

 

 

 

 

 

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