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.
One Stamford Landing, Suite 101,
Stamford, CT 06902
Phone: 203-356-1100
Cell: 203-979-4173
Fax: 203-967-8733
randy@rjallc.com