Department of Labor Final COBRA Notice Rules

An article in Thompson/West’s July Mandated Health Benefits newsletter reports that now that the Department of Labor’s new COBRA notice rules have been finalized, “employers and plan administrators should review the new guidelines carefully and begin to address changes to their COBRA administration procedures & documentation as soon as possible. This is particularly important because noncompliance could lead to significant costs—including penalties under ERISA, unanticipated medical claims, and even attorney fees—if notice disputes are litigated. Additionally, DOL will likely be increasing audit activities on COBRA notice and election issues.”

“According to COBRA’s legislative history,” the article continues, “DOL has the authority to issue guidance only on matters related to COBRA notice & disclosure requirements. The Department of Treasury (through IRS) has the regulatory authority over all other substantive requirements. Similarly, the U.S. Dept. of Heath & Human Services (thru the Centers for Medicare & Medicaid Services) has jurisdiction over COBRA application to plans of state and local governments.”

The new rules create requirements—and, potentially, new liabilities— new time frames for certain notices, and new model notices for use as initial COBRA notices & qualifying event notices. This model notice is an update from the one provided in the 2003 proposed rules, and, as indicated in those proposed rules, DOL’s original model COBRA notice from 1986 may no longer be used to demonstrate good faith compliance.

The DOL final rules also include two additional requirements for plan administrators: a notice of unavailability of COBRA coverage, and a notice of early termination of COBRA coverage.

“Some plan administrators,” the article says, “are under the impression that they can rely on their COBRA service providers to ‘take care of’ the appropriate updates, a generally false assumption. COBRA service providers fill a valuable role in assisting plan administrators in complying with their COBRA administrative responsibilities, (but) COBRA service providers typically are not responsible for updating plan documents and summary plan descriptions (SPDs), or internal plan procedures that might affect qualified beneficiaries, such as identifying organizational units within the employer responsible for receiving notices of divorce or loss of dependant child statuses.”



West’s Mandated Health Benefits: The COBRA Guide is available at the Cincinnati Law Library to members for use in the library or to check out.

The new COBRA notice requirements are available online

Additional material is available by searching “COBRA notice requirements” on the Department of Labor’s website