What is the best practice for initial COBRA notices?
Question: What are the distribution rules for the COBRA initial notice, and why is it generally sent to employees by U.S. mail instead of email?
Compliance Team Answer:
The initial notice is required to go to covered employees and their covered spouses within 90 days of enrollment (there’s no requirement to provide the notice to children).
Also, remember that COBRA initial notices must be sent by mail and addressed to both the covered employee and the covered spouse (if applicable). Electronic or hand delivery is not recommended for the COBRA initial notice because it is generally considered insufficient to satisfy the requirement that the spouse also receive the initial notice.
The COBRA TPA industry has generally adopted this approach and built in the mailing to their standard services.
The rules say that one notice sent to the employee’s home address is sufficient where:
- The notice is addressed to both the covered employee and the covered spouse; and
- Based on the most recent information available to the plan, the covered spouse resides at the same location as the covered employee.
Best practice would be for the COBRA TPA to only send out the initial notice upon enrollment of the employee (and spouse, if enrolled). Otherwise, the notice may be confusing to new hires who are not eligible, or new hires who decline enrollment.
29 CFR §2590.606-1:
- (a) General.
Pursuant to section 606(a)(1) of the Employee Retirement Income Security Act of 1974, as amended (the Act), the administrator of a group health plan subject to the continuation coverage requirements of part 6 of title I of the Act shall provide, in accordance with this section, written notice to each covered employee and spouse of the covered employee (if any) of the right to continuation coverage provided under the plan.
- (b) Timing of notice.
The notice required by paragraph (a) of this section shall be furnished to each employee and each employee’s spouse, not later than the earlier of:
- (i) The date that is 90 days after the date on which such individual’s coverage under the plan commences, or, if later, the date that is 90 days after the date on which the plan first becomes subject to the continuation coverage requirements; or
- (ii) The first date on which the administrator is required, pursuant to §2590.606-4(b), to furnish the covered employee, spouse, or dependent child of such employee notice of a qualified beneficiary’s right to elect continuation coverage.
A notice that is furnished in accordance with paragraph (b)(1) of this section shall, for purposes of section 606(a)(1) of the Act, be deemed to be provided at the time of commencement of coverage under the plan.
In any case in which an administrator is required to furnish a notice to a covered employee or spouse pursuant to paragraph (b)(1)(ii) of this section, the furnishing of a notice to such individual in accordance with §2590.606-4(b) shall be deemed to satisfy the requirements of this section.
(d) Single notice rule.
A plan administrator may satisfy the requirement to provide notice in accordance with this section to a covered employee and the covered employee’s spouse by furnishing a single notice addressed to both the covered employee and the covered employee’s spouse, if, on the basis of the most recent information available to the plan, the covered employee’s spouse resides at the same location as the covered employee, and the spouse’s coverage under the plan commences on or after the date on which the covered employee’s coverage commences, but not later than the date on which the notice required by this section is required to be provided to the covered employee. Nothing in this section shall be construed to create a requirement to provide a separate notice to dependent children who share a residence with a covered employee or a covered employee’s spouse to whom notice is provided in accordance with this section.
About the author
Lead Benefits Counsel
Brian Gilmore is the Lead Benefits Counsel at Newfront. He assists clients on a wide variety of employee benefits compliance issues. The primary areas of his practice include ERISA, ACA, COBRA, HIPAA, Section 125 Cafeteria Plans, and 401(k) plans. Brian also presents regularly at trade events and in webinars on current hot topics in employee benefits law. Connect with Brian on LinkedIn.
The information provided is of a general nature and an educational resource. It is not intended to provide advice or address the situation of any particular individual or entity. Any recipient shall be responsible for the use to which it puts this document. Newfront shall have no liability for the information provided. While care has been taken to produce this document, Newfront does not warrant, represent or guarantee the completeness, accuracy, adequacy, or fitness with respect to the information contained in this document. The information provided does not reflect new circumstances, or additional regulatory and legal changes. The issues addressed may have legal, financial, and health implications, and we recommend you speak to your legal, financial, and health advisors before acting on any of the information provided.
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