Randolph Johnson Associates Alert

New COBRA Regulations Effect All Plans

Employers with more than 20 employees, and all employers in Connecticut, must offer employees and their families the option to pay for continuation of their healthcare coverage, for up to 18 months for and employee’s lose of coverage due to termination or a reduction in hours, and for up to 36 months continuation for spouses who lose coverage due to divorce or legal separation, or lose of coverage because of entitlement to Medicare, the death of a covered employee, or a child’s change in dependent status.

In general the new regulations modify the information and notices required to be provided to employees and their spouses. The regulations apply starting with the first day of the first plan year beginning after November 25th, 2004. Thus, for calendar year plans the new regulations would be effective on January 1, 2005. As an action plan, employers should be providing the following:

General Notice – Plan sponsors are required to provide all new employees and their spouses with a General Notice when their coverage begins. The regulations modify this notice as per the attached.

Summary Plan Descriptions (SPD) – The regulations now allow the SPDs to satisfy General Notice requirement provided that the SPD description meet the content requirements and that the SPD is mailed/delivered to the employee when they are first covered.

Qualifying Event Notice – An employer must notify the plan administrator within 30 days of an employee’s termination or reduction in hours; the plan administrator then has 14 days to communicate with the employee. If the employer and plan administrator are the same, then notification time to the employee is 44 days. The employee or spouse has 60 days to respond. The regulations modify this notice as per the attached.

Rejection Notice – The plan administrator must notify individuals who erroneously file a Qualifying Event Notice and explain why they are not entitled to COBRA. The DOL did not provide a model notice.

Early Termination Notice – The plan administrator must notify the individual if their coverage is terminated before the end of the maximum continuation period. The DOL did not provide a model notice.

Note: This is brief summary of very extensive regulations, and may not address specific situations or questions. Further, Randolph Johnson Associates is not a law firm and this Alert is not intended to provide legal advice. All legal questions should be directed to an organization’s legal counsel.

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