COBRA Notices – Important Then, Important Now

The COBRA deadline extensions that began in 2020 as a result of the pandemic are still in place – what does this mean for employers and qualified beneficiaries? It means that they have more time to meet certain requirements. Employers have more time to provide a COBRA election notice to qualified beneficiaries, while qualified beneficiaries have more time to elect COBRA coverage and make premium payments. For a complete list of COBRA extensions currently affected by the pandemic, visit www.ebcflex.com/covid19answers.

Even with the deadline extensions, employers are obligated to provide their employees and qualified beneficiaries with all required COBRA notices in a timely manner. The sections below outline the COBRA notices employers are required to distribute and the times that they must be sent out. These timelines are based on Federal COBRA obligations and employers should be aware that state continuation rules may require shorter timelines.

Initial Notice

COBRA requires employers to provide an initial notice to each covered employee and spouse within 90 days of coverage starting (or from when the plan first becomes subject to COBRA). This deadline for this notice may be accelerated if the employee or covered dependent experiences a COBRA qualifying event before the notice is delivered.

Are there times that employees or their spouses should receive another initial notice even if they receive it once after first enrolling in coverage?

The answer is yes. A new initial notice should be provided in each of the following instances.

Example: An employee only enrolls in the group medical insurance when they’re first hired. At open enrollment, they elect dental coverage. Since new coverage has been added, a new initial notice should be provided.

Example: An employee enrolls in group medical insurance and a health care FSA. They get married mid-year and notify their employer. Even if the employee does not enroll their new spouse on the group medical plan, the spouse should receive an initial notice because they are now covered under the health care FSA. Likewise, a new notice should be provided to the employee and spouse if an employee were to have a new dependent.

Example: An employee enrolls in coverage. At open enrollment, they waive all coverage. At the subsequent open enrollment, they enroll again. A new initial notice should be provided.

Failure to provide an initial notice means that the deadlines outlined in the initial notice cannot be enforced. This includes notification from the covered employee or qualified beneficiary of a divorce, legal separation, or a dependent’s ceasing to be a dependent. If the initial notice was never sent out, the covered individual doesn’t know what timeframe they have to notify their employer by, and the deadlines cannot be enforced.

If an employer is not able to enforce these deadlines, it exposes their plan to the risk of having to honor these qualifying events beyond the standard 60-day* window. This can become costly to an employer and their plan as the insurance carrier would not be obligated to provide coverage under the late notifications and an employer may need to self-insure for these situations.

*COVID relief deadline extensions during the outbreak period apply to the employee’s or qualified beneficiary’s deadline to notify an employer of these events.

Qualifying Event / Election Notice

COBRA requires employers to provide an election notice to qualified beneficiaries after they experience a qualifying event. If an employer uses a plan administrator, the employer has 30 days from the qualifying event (not the date of the loss of coverage) to notify the plan administrator of the event. The plan administrator then has 14 days to provide the notice to the qualified beneficiaries. If the employer and plan administrator are the same, they have 44 days to provide the notice to the qualified beneficiaries. Since 2020, the deadline for the election notice to be provided has been extended under the outbreak period, giving employers and plan administrators additional time, as needed, to send this notice.

Regardless of the deadlines, it’s a best practice to send the election notice to qualified beneficiaries as soon as possible. The sooner the notice is sent, the sooner the qualified beneficiary is required to make an election. This is particularly important because qualified beneficiaries still have deadline extensions that allow for them to elect coverage (and pay for coverage) beyond the standard deadlines. Delaying the election notice can provide hardship for qualified beneficiaries if they are not able to demonstrate to providers that they have coverage under COBRA, as they are still awaiting their election notice.

Other Required Notices

Most employers are aware of the initial notice and COBRA election notice but don’t realize there are several other important notices that need to be provided. Employers or plan administrators are required to send the following notices when applicable:

• • Notice of Unavailability of COBRA Coverage
  • Notice of Termination of COBRA Coverage
  • Notice of COBRA Premiums Shortfalls by Insignificant Amount
  • Individual Conversion Policy Notices

  Employers are also obligated to provide COBRA qualified beneficiaries with the same notices under ERISA that they are required to provide to active employees.

  • • Open Enrollment Materials
    • Summary Plan Descriptions / Summary of Material Modifications
    • Disclosures to Health Care Providers
    • Notice of Rescission (required under health care reform)
    • Summary of Benefits and Coverage for group health plans (required under health care reform)

    Find out how employers can avoid a headache by sending a COBRA blanket notification to all participants with EBC.

    Whether you’re moving to EBC from a prior third-party administrator (TPA) or just want to make sure you’re up-to-date with the necessary notices, consider issuing a blanket notification. A blanket notification provides all enrolled participants with the required initial COBRA notice, whether they had received it before or not. Not only does this ensure that every eligible individual received the notice, but it also provides the employer with proper documentation that serves as proof if questions were to arise on whether the notice went out and when.

    Attend our Webinar!

    Interested in a further in-depth look at the state of COBRA in 2022? Attend our webinar on September 28, where Janine Haar, GBA, HSAe, will answer frequently asked COBRA questions, including:

    • • Does any COVID relief still apply to COBRA?
      • As an employer, what are my COBRA responsibilities?
      • Can employers offer more than the minimum COBRA requirement?

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