Health Care Continuation Coverage; Final Rule [05/26/2004]
Volume 69, Number 102, Page 30083-30112
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Part V
Department of Labor
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Employee Benefits Security Administration
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29 CFR Part 2590
Health Care Continuation Coverage; Final Rule
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Part 2590
RIN 1210-AA60
Health Care Continuation Coverage
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Final rules.
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SUMMARY: This document contains final rules implementing the notice
requirements of the health care continuation coverage (COBRA)
provisions of part 6 of title I of the Employee Retirement Income
Security Act of 1974 (ERISA or the Act). The continuation coverage
provisions generally require group health plans to provide participants
and beneficiaries who under certain circumstances would lose coverage
(qualified beneficiaries) the opportunity to elect to continue coverage
under the plan at group rates for a limited period of time.
The final rules set minimum standards for the timing and content of
the notices required under the continuation coverage provisions and
establish standards for administering the notice process. These rules
affect administrators of group health plans, participants and
beneficiaries (including qualified beneficiaries) of group health
plans, and the sponsors and fiduciaries of such plans. These rules also
provide model notices for use by administrators of single-employer
group health plans to satisfy their obligation to provide general
notices and election notices.
DATES: Effective date: These regulations are effective July 26, 2004.
Applicability date: These regulations apply to notice obligations
arising under the COBRA provisions of part 6 of title I of ERISA on or
after the first day of the first plan year beginning on or after the
date that is six months after May 26, 2004.
FOR FURTHER INFORMATION CONTACT: Lisa M. Alexander or Suzanne M.
Adelman, Office of Regulations and Interpretations, Employee Benefits
Security Administration, (202) 693-8500. This is not a toll-free
number.
SUPPLEMENTARY INFORMATION:
A. Background
The continuation coverage provisions, sections 601 through 608 of
title I of ERISA, were enacted as part of the Consolidated Omnibus
Budget Reconciliation Act of 1985 (COBRA), which also promulgated
parallel provisions that became part of the Internal Revenue Code
(Code) and the Public Health Service Act (PHSA).\1\ See Code section
4980B; PHSA, 42 U.S.C. 300bb-1 et seq. These provisions are commonly
referred to as the COBRA provisions, and the continuation coverage that
they mandate is commonly referred to as COBRA coverage. The COBRA
provisions of title I of ERISA generally require that ``any group
health plan'' \2\ offer ``qualified beneficiaries'' the opportunity to
elect ``continuation coverage'' following certain events that would
otherwise result in the loss of coverage (``qualifying events'').\3\
Continuation coverage is a temporary extension of the qualified
beneficiary's previous group health coverage. The right to elect
continuation coverage allows individuals to maintain group health
coverage under adverse circumstances and to bridge gaps in health
coverage that otherwise could limit their access to health care.
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\1\ The Code and PHSA COBRA provisions, although very similar in
other ways, are not identical to the COBRA provisions in title I of
ERISA in their scope of application. The PHSA provisions apply only
to State and local governmental plans, and the Code provisions grant
COBRA rights to individuals who would not be considered participants
or beneficiaries under ERISA. See PHSA, 42 U.S.C. 300bb-8; Code
section 5000(b)(1).
\2\ A group health plan is not subject to the COBRA provisions
for any calendar year if all employers maintaining such plan
normally employed fewer than 20 employees on a typical business day
during the preceding calendar year. See ERISA section 601(b).
\3\ Each of the quoted terms is specifically defined in the
COBRA provisions. In particular, the term ``group health plan'' is
defined in section 607(1) of the Act to mean an employee welfare
benefit plan as defined in section 3(1) of the Act that provides
medical care (as defined in section 213(d) of the Code) to
participants or beneficiaries directly or through insurance,
reimbursement, or otherwise. The Department notes that employee
welfare benefit plans under ERISA include, inter alia, plans
sponsored by unions for their members as well as plans sponsored by
employers for their employees. Such union-sponsored plans would not
involve employers in any sponsorship capacity, nor would they
necessarily cover individuals all of whom are employees. Although
the proposed regulations use the terms ``employer'' and
``employee,'' as do the COBRA provisions, in assigning duties, they
are intended to apply to all group health plans, as defined in
section 607(1) of the Act, subject to COBRA.
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COBRA, as enacted, provides that the Secretary of Labor (the
Secretary) has the authority under section 608 of ERISA to carry out
the provisions of part 6 of title I of ERISA. The Conference Report
that accompanied COBRA divided interpretive authority over the COBRA
provisions between the Secretary and the Secretary of the Treasury (the
Treasury) by providing that the Secretary has the authority to issue
regulations implementing the notice and disclosure requirements of
COBRA, while the Treasury is authorized to issue regulations defining
the required continuation coverage.\4\ Under its authority to interpret
the COBRA provisions, the Treasury has issued final regulations that
provide rules for determining which plans are subject to the COBRA
provisions, who is or can become a qualified beneficiary, which events
constitute qualifying events, what COBRA obligations exist in the case
of mergers and acquisitions, and the nature of the continuation
coverage that must be offered. See Treas. Reg. Sec. Sec. 54.4980B-1
through 54.4980B-10.
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\4\ H.R. Conf. Rep. No. 99-453 at 562-63 (1985). The Conference
Report further indicated that the Secretary of Health and Human
Services, who is to issue regulations implementing the continuation
coverage requirements for State and local governments, must conform
the actual requirements of those regulations to the regulations
issued by the Secretary and the Treasury. Id. at 563.
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On May 28, 2003, the Department of Labor (the Department) published
in the Federal Register (68 FR 31832) proposed regulations governing
the timing, content, and administration of the notice obligations
arising under sections 601 through 608 of ERISA.\5\ In response to the
proposed COBRA notice regulations, the Department received 26 public
comments from an array of interested parties, including organizations
representing employers, group health plans, plan administrators,
persons specializing in COBRA administration, and participants and
beneficiaries.
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\5\ Prior to the development of proposed rules, the Department
published a Request for Information (RFI) to assess public views on
the advisability of developing regulations on the COBRA notice
provisions. See 62 FR 49894 (Sept. 23, 1997). The Department
received 15 comments, all of which were taken into account in
developing the proposed rules.
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The Department has made a number of changes to the regulations and
model notices in response to the public comments received on the
proposals. The following provides an overview of the final rules,
public comments, and changes from the proposed regulations. These final
rules implementing the notice requirements of the COBRA provisions of
part 6 of title I of ERISA also apply for purposes of the COBRA
provisions of section 4980B of the Code.\6\
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\6\ As noted in footnote 1, above, certain COBRA provisions
(such as the definitions of group health plan, employee and
employer) are not identical in the Code and title I of ERISA. The
Treasury has reviewed these rules and concurs that, in those cases
in which the statutory language is not identical, Sec. Sec.
2590.606-1 through 2590.606-4 would nonetheless apply to the COBRA
provisions of Sec. 4980B of the Code, except to the extent that
such regulations are inconsistent with the statutory language of the
Code.
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B. Overview of Final Regulations
The final COBRA notice rules, like the proposals, consist of four
separate regulations. Section 2590.606-1 covers the general notice
requirement. In an appendix to Sec. 2590.606-1, a model general notice
is provided to facilitate compliance with the general notice
requirements. Section 2590.606-2 creates rules for employer-provided
notices of the occurrence of a qualifying event. Section 2590.606-3
addresses the responsibilities of qualified beneficiaries to provide
notice of a qualifying event or a disability. Section 2590.606-4 deals
with the election notice and other notices that plan administrators
must provide. In an appendix to Sec. 2590.606-4, a model election
notice is provided to facilitate compliance with the election notice
requirements.
The model notices provided in the appendices to Sec. Sec.
2590.606-1 and 2590.606-4 are intended to be used by single-employer
plans. Other types of plans, such as multiemployer plans and plans
sponsored by unions for their members, would have to modify the model
notices to reflect the special rules or practices that apply in the
case of such plans.\7\ The Department further notes that the use of the
model notices is not required. The model notices included with these
regulations are provided solely for the purpose of facilitating
compliance with the applicable notice requirements. The furnishing of
appropriately and accurately completed model notices, however, will be
considered by the Department to constitute compliance with the
requirements of the applicable notice regulation.
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\7\ The model election notice is not designed to be used when
bankruptcy is the qualifying event.
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Section 2590.606-1 General Notice
Section 606(a)(1) of ERISA requires group health plans to provide
written notice of COBRA rights to each covered employee and spouse (if
any) ``at the time of commencement of coverage'' under the plan.
Section 2590.606-1 establishes the time frames within which this
general notice must be provided and describes the specific information
that the general notice must contain.
The final regulation retains the same general structure of the
proposal. As discussed below, however, some changes to both the
regulation and the accompanying model general notice have been made in
response to public comments.
Paragraph (b) of the final regulation addresses the timing
requirements applicable to the general notice requirement of section
606(a)(1) of the Act. Similar to the proposal, paragraph (b)
establishes a 90-day period for furnishing the general notice.
Generally, the notice must be furnished to each covered employee and to
the employee's spouse (if covered under the plan) not later than the
earlier of: (1) either 90 days from the date on which the covered
employee or spouse first becomes covered under the plan or, if later,
the date on which the plan first becomes subject to the continuation
coverage requirements; or (2) the date on which the administrator is
required to furnish an election notice to the employee or to his or her
spouse or dependent.
While a few commenters expressed concern about the timing of the
general notice, the majority of commenters supported the provision as
better reflecting current practice and fostering efficiency through its
possible combination with the summary plan description (SPD). The
Department continues to believe that the timing requirements of the
regulation protect covered employees and their spouses during the first
90 days of coverage by ensuring that they timely receive all the
information they need to understand their rights. For this reason, the
Department has retained the timing provisions as proposed. In response
to several comments requesting clarification that the date for the
furnishing of the general notice under the regulation is the
``commencement of coverage'' date for purposes of section 606(a)(1) of
the Act, the Department has added a new paragraph (Sec. 2590.606-
1(b)(2)), providing that a notice furnished in accordance with the
timing requirement of the regulation is deemed to be provided at the
time of commencement of coverage under the plan.
A number of commenters questioned the need to furnish a general
notice in addition to an election notice when the election notice must
be given to an individual within the initial 90-day period of coverage.
Having reviewed the information required to be contained in the general
notice described in Sec. 2590.606-1(c), and the election notice
described in Sec. 2590.606-4(b)(4), the Department believes that,
given the comprehensive nature of the information in the election
notice and its importance to a qualified beneficiary, the furnishing of
a general notice simultaneously with an election notice during the
initial 90-day period would be duplicative, if not confusing or
distracting. To address this issue, a new paragraph (Sec. 2590.606-
1(b)(3)) has been added to the final regulation providing that, where
an individual is required to be furnished an election notice within the
90-day period for furnishing general notices, the plan administrator
may satisfy its general notice obligation by furnishing an election
notice in accordance with the final regulation (Sec. 2590.606-4(b)).
Paragraph (c) of the regulation sets forth the required minimum
content of a general notice. These content requirements cover basic
information regarding COBRA and the rights and responsibilities of
qualified beneficiaries that a participant or beneficiary would need to
know before the occurrence of a qualifying event in order to be able to
protect his or her COBRA rights.
Several commenters argued that the proposed regulation and model
notice should be modified to eliminate or reduce plan-specific
information. These commenters generally argued that the use of
``generic'' (non-plan specific) general notices could result in cost-
savings since the same notice could be used without customization by
COBRA administrators for multiple plans. While the Department
appreciates the arguments in favor of a ``generic'' notice, the
Department believes that covered employees and spouses need to know the
name of the plan and a plan contact for further continuation coverage
and plan information. The Department notes that Technical Release 86-2
(June 26, 1986), which provided a model general notice for use shortly
after COBRA was enacted, required inclusion of plan-specific
information for the same reasons. The Department, therefore, has
retained these requirements in the regulation. However, in an effort to
minimize the difficulty of customizing the general notice, the
Department has modified the model general notice to allow placement of
plan-specific identification information at the end of the notice. The
Department also has modified the model general notice to eliminate
identification of both the plan administrator and the COBRA
administrator. As modified, the model general notice requires only the
name, address, and phone number of a party or parties who will provide
information about the plan and COBRA upon request.
A number of commenters argued that the general notice should not be
required to address the responsibilities of qualified beneficiaries to
provide notice of second qualifying events, noting that such
information is more appropriate for the SPD and election notices. The
Department agrees with the commenters that the general notice
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should be as informative as possible without being unnecessarily
complex. For this reason, the Department has modified paragraph (c)(4)
to eliminate the proposed requirement that the notice describe how
qualified beneficiaries who are receiving continuation coverage must
provide notice of a second qualifying event. In addition to being
included in plan SPDs, this information is included as part of the
election notice required under Sec. 2590.606-4 and, therefore, will be
furnished when it will be more relevant to the qualified beneficiary.
Commenters also argued that, because different qualifying events
under a single plan may produce different COBRA coverage start dates
(since the plan may choose to begin COBRA coverage on either the date
of the qualifying event or the date of loss of coverage), requiring
that specific information to be described in the general notice makes
the notice unnecessarily complicated, particularly since this
information will be available in SPDs. The commenters assumed the
regulation required such detail because the proposed model general
notice provided for inclusion of this information. The Department
agrees with the commenters that such information should not be required
as part of the general notice if it will make the notice unnecessarily
complicated. While no changes are required to the regulation, to avoid
any confusion, the Department has modified the model general notice to
eliminate references to COBRA coverage beginning dates. The Department
notes, however, that nothing in the regulation or the model general
notice precludes a plan administrator from including such information
in a plan's general notice.
A few commenters expressed concern that the proposal required the
general notice to include a statement that more complete information
about continuation coverage and other rights under the plan is
available from the plan administrator and the plan's SPD. Because
covered employees and spouses may need additional information about
their rights under their plan, the Department believes that they should
be reminded that there are sources for that information, namely the
plan administrator and the plan's SPD. Therefore, this provision is
retained in the final regulation.
Paragraph (d) permits delivery of a single notice addressed to a
covered employee and the covered employee's spouse at their joint
residence, provided the plan's latest information indicates that both
reside at that address. A single notice would not be permitted,
however, if a spouse's coverage under the plan begins at a different
time from the covered employee's coverage, unless the spouse's coverage
begins before the date on which the notice must be provided to the
covered employee, and a single notice is then timely sent to their
joint address. In response to one commenter's request, paragraph (d)
has been revised to clarify that there is no requirement to furnish a
general notice to dependent children, even if the general notice
requirement is triggered early by the occurrence of a qualifying event
involving such an individual.
As indicated in the preamble to the proposal, in-hand furnishing of
the general notice at the workplace to a covered employee is deemed to
be adequate delivery to the employee, although such delivery to the
employee would not constitute delivery to the spouse. Except for minor
editorial changes intended to make the provision more clear, this
paragraph is being retained as proposed.
Paragraph (e) of the final regulation permits plans to satisfy the
general notice requirement by including the information described in
paragraphs (c)(1), (2), (3), (4), and (5) in the SPD of the plan and
providing the SPD at a time that complies with the timing requirements
for the general notice. Some commenters argued that, given the
importance of the information it contains, the general notice should be
required to be furnished as a stand-alone notice, as well as being
included in the SPD. The Department continues to believe that many, and
perhaps most, plans would prefer to take advantage of the reduced cost
and added efficiency of providing a single disclosure document that
satisfies both the general notice requirement and the SPD requirement.
Moreover, the Department believes that participants and beneficiaries
are more likely to retain and have ready access to their SPD than a
general notice furnished separate and apart from their SPD. The
Department, therefore, has retained this provision without change. The
Department emphasizes, however, that retention of this provision is not
intended in any way to limit a plan's flexibility to provide other
information in other forms to its employees and the spouses of its
employees.
As noted in the proposal, if a plan chooses to satisfy its SPD and
general notice obligations by furnishing a single document, the plan
must ensure that the document satisfies both the general notice content
requirements and the SPD content requirements.\8\
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\8\ The SPD content regulation, Sec. 2520.102-3, specifies
other information, in addition to description of COBRA rights, that
must be included in an SPD for a group health plan. See, e.g., Sec.
2520.102-3(j), (l), (s).
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Paragraph (f) provides that delivery of the general notice must be
made in accordance with the standards of 29 CFR 2520.104b-1, including
the standards for use of electronic media. There were no comments
suggesting changes to this provision. Accordingly, the provision is
being adopted without change. A discussion of general issues relating
to the furnishing of notices is contained in section C, entitled
``Miscellaneous.''
The model general notice appended to Sec. 2590.606-1 has been
revised to reflect the changes discussed above. The Department also has
made a number of editorial changes in response to suggestions and
recommendations to improve the clarity of the model general notice.
Section 2590.606-2 Employer's Notice of Qualifying Event
Section 606(a)(2) of ERISA requires an employer to provide notice
to the plan administrator of a qualifying event that is either the
employee's termination of employment or reduction in hours of
employment, the employee's death, the employee's becoming entitled to
Medicare, or the commencement of a proceeding in bankruptcy with
respect to the employer. Regulation Sec. 2590.606-2 addresses this
notice obligation of employers.
Paragraph (b) of the regulation provides that an employer shall
notify the plan administrator of a qualifying event no later than 30
days after the date of the qualifying event. However, paragraph (b)
further provides that, for any plan under which continuation coverage
begins, pursuant to section 607(5) of the Act, with the date of loss of
coverage, the 30-day period for providing the notice of qualifying
event must also begin with the date of loss of coverage, rather than
the date of the qualifying event. Paragraphs (b) and (d) also recognize
that multiemployer plans may have different notice periods, as
permitted under sections 606(a)(2) and 606(b).
Paragraph (c) of the regulation requires that an employer provide
the plan administrator sufficient information to enable the
administrator to determine the identity of the plan, the covered
employee, the qualifying event, and the date of the qualifying event.
The comments received by the Department on this regulation
supported the approach taken in the proposal. The Department,
therefore, is
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adopting this section without modification.
Section 2590.606-3 Qualified Beneficiaries' Notices
Under section 606(a)(3) of the Act, each covered employee or
qualified beneficiary is responsible for notifying the plan
administrator of a qualifying event that is either the divorce or legal
separation of the employee from his or her spouse or a child's becoming
no longer eligible to be covered as a dependent under the plan.
Regulation Sec. 2590.606-3 provides guidance with respect to this
notice obligation and other notice obligations of qualified
beneficiaries, such as the notice of disability or second qualifying
event. Except as noted below, the final regulation follows the
framework of the proposal.
Paragraph (a) describes the notices that covered employees and
qualified beneficiaries may be required to provide to the
administrator, which include notices of the occurrence of a qualifying
event that is a divorce, legal separation, or a child's ceasing to be a
dependent under the plan; the occurrence of a second qualifying event;
a determination of disability by the Social Security Administration;
and a determination by the Social Security Administration that a
qualified beneficiary is no longer disabled.
Paragraph (b) of the final regulation, like the proposal, requires
plans to establish reasonable procedures for the furnishing of these
notices and sets general standards for what will be considered
reasonable.\9\ Under this provision, a plan's procedures generally will
be considered reasonable if they are described in the plan's SPD,
specify who is designated to receive notices, and specify the means
qualified beneficiaries must use for giving notice and the required
content of the notice. Paragraph (b) further provides that, if a plan
does not have reasonable procedures for qualified beneficiaries'
notices, notice will be deemed to have been provided when a written or
oral communication identifying a specific event is communicated in a
manner reasonably calculated to bring the information to parties that
would customarily be considered to be responsible for the plan. The
proposed regulation specified that, in the case of a single-employer
plan that failed to adopt reasonable procedures, notice would be deemed
provided if communicated either to the person or organizational unit
that has customarily handled employee benefit matters of the employer
or to any officer of the employer.
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\9\ ERISA does not mandate that qualified beneficiaries provide
notices of qualifying event or disability. A qualified beneficiary
may not wish to elect or extend continuation coverage and may
therefore decide to forgo providing the notice of qualifying event
without violating the COBRA provisions.
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While some commenters expressed concern that requiring plans to
adopt qualified beneficiary notice procedures may force them into
creating formal, inflexible procedures that will harm participants,
most commenters recognized and supported the importance of establishing
notice processes that are clearly communicated to the plan's
participants and beneficiaries. With regard to plans that fail to adopt
reasonable procedures, some commenters suggested that notice should
also be deemed to have been provided if given to the managers and
supervisors of the employee. Other commenters argued that recognizing
oral notifications and notifications given to the officers of an
employer would cause confusion and uncertainty as to when and if notice
was provided. In response to these comments, the Department has decided
to retain the default standards recognizing oral notifications, where a
plan fails to adopt reasonable notification procedures. To restrict the
default notice standards to recognize only written communications would
allow plans that fail to adopt express notice procedures to rely on a
de facto standard requiring written notice, which in the Department's
view would be unfair to participants and beneficiaries. However, the
Department recognizes that the breadth of the approach of the proposed
regulation in this regard may have the potential for uncertainty and
confusion. Since it is reasonable to expect an employee or qualified
beneficiary, even in the absence of reasonable plan procedures, to give
notice of an event to a party that customarily handles employee benefit
matters, the Department has eliminated the reference, at Sec.
2590.606-3(b)(4)(i), to ``any officer of the employer.''
Like the proposal, paragraph (b)(3) of Sec. 2590.606-3 provides
that plans may require qualified beneficiaries to provide specific
information via a specific form, if the form is easily available to
qualified beneficiaries without cost. One commenter objected to
allowing plans to require use of a specific form for notice of
qualifying event. The Department believes that employees and qualified
beneficiaries may, in fact, benefit from a plan's use of specific
forms, which would remove uncertainty about how to comply with the
plan's requirements. The Department, therefore, has retained this
provision in the final regulation without change.
Paragraph (c) provides the time limits that may apply to qualified
beneficiaries' notices. These limits are minimums that may be imposed
by a plan. There is nothing in the regulation that prevents plans from
providing longer periods for furnishing these notices. In general, a
plan must allow an employee or qualified beneficiary at least 60 days
to provide notice of a qualifying event that is divorce, legal
separation, a child's ceasing to be a dependent under the plan, or a
second qualifying event. As proposed, the starting date for the minimum
60-day period was based, in part, on what the plan provided for the
start of COBRA coverage pursuant to section 607(5) of the Act. At the
suggestion of a commenter and for purposes of simplicity, the
Department has restructured paragraph (c)(1) of Sec. 2590.606-3 to
conform with Treasury regulations by providing that the 60-day period
begins to run from the latest of: (1) The date of the qualifying event;
(2) the date on which there is a loss of coverage; or (3) the date on
which the qualified beneficiary is informed, through the plan's SPD or
the general COBRA notice, of his or her obligation to provide notice
and the procedures for providing such notice. See Treas. Reg. Sec.
54.4980B-6, Q&A-2.
One commenter questioned why the regulation requires the furnishing
of an SPD or general COBRA notice before the 60-day period for notices
of qualifying event may begin to run against a qualified beneficiary.
Inasmuch as a qualified beneficiary might be denied continuation
coverage because he or she failed to furnish timely notice of a
qualifying event, the Department believes that disclosing the notice
obligations and the procedures for providing such notice is critical to
the exercise of statutory rights. The framework of the final
regulation, like the proposal, is intended to ensure that qualified
beneficiaries will not be adversely affected in efforts to exercise
their COBRA rights by a plan's failure to provide adequate disclosure.
Several commenters raised questions concerning the time limits, at
Sec. 2590.606-3 (c)(2) of the proposed rule, for notices of disability
determinations.\10\ Specifically, the
[[Page 30088]]
commenters suggested that the proposal was ambiguous with respect to
individuals who receive a disability determination from the Social
Security Administration (SSA) at some time prior to the occurrence of a
qualifying event. Since the proposed regulation would permit plans to
require qualified beneficiaries to provide a disability notice within
60 days of the later of (1) the date of the SSA disability
determination, or (2) the date on which the qualified beneficiary is
notified of the obligation to provide the disability notice, the
commenters requested that the Department clarify whether and how these
rules would apply to individuals who received an SSA disability
determination before receiving notice of the obligation to provide the
disability notice. The commenters noted that the Treasury regulations
create a rule for individuals who have been determined by SSA to be
disabled prior to the occurrence of a qualifying event under which
their disability is considered to continue to exist as of the
qualifying event, provided SSA has not issued a subsequent
determination that they are no longer disabled. Under the Treasury
regulations, therefore, qualified beneficiaries who have a prior SSA
disability determination are considered to meet the statutory
requirement of being disabled ``within the first 60 days'' of COBRA
coverage. See Treas. Reg. Sec. 54.4980B-7, Q&A-5(c).
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\10\ The COBRA provisions require group health plans to provide
certain qualified beneficiaries an 11-month disability extension of
an 18-month period of COBRA coverage (resulting in a total of 29
months of COBRA coverage), provided the qualified beneficiary (or
any other qualified beneficiary who is a member of his or her
family) is both determined by SSA to be disabled during the first 60
days of COBRA coverage and also provides notice to the plan of SSA's
disability determination within 60 days after the date of the
determination. The notice must be provided before the end of the
first 18 months of continuation coverage. See ERISA sections
602(2)(A); 606(a)(3).
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The Department agrees with the commenters that there is a need for
further clarification in this area. Following a review of section
606(a)(3) of the Act, the legislative changes to the COBRA provisions
since 1986, and the Treasury regulations, the Department has concluded
that, for purposes of section 606(a)(3) of the Act, an SSA disability
determination, once issued, should be considered to remain in
continuing effect until the SSA makes a contrary determination.\11\ For
this reason, the Department believes that section 606(a)(3) is best
interpreted to permit plans to require qualified beneficiaries to
provide a disability notice within 60 days after the latest of: (1) The
date of the SSA disability determination; (2) the date on which the
qualifying event occurs; (3) the date on which the qualified
beneficiary loses coverage; or (4) the date on which the qualified
beneficiary is informed of the obligation to provide the disability
notice. The final regulation reflects this interpretation in Sec.
2590.606-3(c)(2). Under this interpretation, an individual who
previously received an SSA disability determination and has not
received a subsequent SSA determination that he or she is no longer
disabled would have at least 60 days after the occurrence of a
qualifying event to provide the plan with a disability notice in order
to be entitled to the disability extension.\12\ There is nothing that
precludes plans from allowing a longer period for providing this
notice. For example, a plan may find it administratively more
convenient to permit individuals who receive an SSA determination prior
to a qualifying event to provide the notice of disability within the
same time period within which the election notice is required to be
provided.
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\11\ Congress recognized the continuing effect of an SSA
disability determination by including in the COBRA provisions both a
provision requiring a qualified beneficiary who provides a
disability notice to provide the plan with a subsequent notice if
the SSA determines him or her to be no longer disabled and a
provision permitting plans to terminate the 11-month disability
extension one month after the SSA makes a determination that the
qualified beneficiary is no longer disabled. See ERISA sections
602(2)(E); 606(a)(3).
\12\ The general notice requirement would also have to have been
fulfilled with respect to that individual. Since the general notice
is required to be furnished only to the covered employee and spouse
(if also covered), the Department will consider furnishing the
general notice to either of those two individuals adequate notice
with respect to a disabled child of the covered employee for this
purpose.
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Paragraph (d) of Sec. 2590.606-3, like the proposal, provides that
a plan may not reject an incomplete notice as untimely if the notice is
provided within the plan's time limits and contains enough information
to enable the plan administrator to identify the plan, the covered
employee and qualified beneficiar(ies), the qualifying event or
disability determination, and the date on which such event or
determination occurred. However, if a timely notice fails to supply all
of the information required under the plan's procedures, the plan
administrator can require qualified beneficiaries to supply the missing
information. Several commenters asked for a clarification as to whether
a plan could reject a deficient notice if, following a request to
provide the information required by the plan's procedures, a covered
employee or qualified beneficiary fails to provide the requested
information. It is the view of the Department that there is nothing in
the final regulation that would preclude a plan, following a request
for more complete information, from rejecting a notice when an employee
or qualified beneficiary fails to provide the requested information
within some reasonable period of time. The Department believes that
both the plan and the plan's participants and beneficiaries would
benefit from a procedure that specifically defines when and under what
circumstances, following a request for more complete information, a
notice will be rejected due to a failure to provide the information a
plan requires.\13\
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\13\ The plan's procedures must be reasonable in all respects,
including the rules for what information is required, how much time
an individual is given to provide the required information, and the
bases for accepting or rejecting a notice.
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In view of the comments, paragraph (d) of the proposal is adopted
without modification. Inasmuch as no comments were submitted on
paragraphs (e) through (g) of the proposal, those paragraphs are also
adopted as proposed.
Section 2590.606-4 Plan Administrator's Notice Obligations
Section 606(a)(4) of ERISA requires a plan administrator to notify
each qualified beneficiary who is entitled to elect continuation
coverage of his or her COBRA rights. Section 606(c) requires a plan
administrator to provide such notice within 14 days after the plan
administrator is notified of a qualifying event. Regulation Sec.
2590.606-4 provides guidance on the requirements of sections 606(a)(4)
and 606(c). In general, the regulation describes timing and content
requirements for election notices, requires administrators to notify
individuals under certain circumstances if continuation coverage is
determined not to be available, and requires plan administrators to
provide notice when continuation coverage terminates before the end of
the maximum period for such coverage.
Paragraph (a) of the final regulation describes the obligation of
the administrator of a group health plan to provide qualified
beneficiaries with notice of their right to elect continuation coverage
under the plan.
Paragraph (b) of the final regulation addresses the specific timing
and content requirements for the election notice.\14\ With regard to
timing,
[[Page 30089]]
paragraph (b)(1) of the final regulation generally provides that the
administrator shall furnish an election notice to qualified
beneficiaries within 14 days after the receipt of notice of a
qualifying event.
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\14\ The regulation requires an administrator to provide an
election notice only when it has been determined that a qualified
beneficiary is entitled to elect continuation coverage. In this
regard, the Department notes that it is the administrator's
responsibility to determine whether individuals who are named in a
notice of qualifying event are entitled to continuation coverage and
that disputes may arise over the correctness of the administrator's
determinations. The Department further notes that determinations
regarding eligibility for COBRA continuation coverage, like
determinations involving eligibility for coverage under a group
health plan, are not governed by ERISA's claims procedure regulation
unless they relate to a specific claim for benefits. See preamble to
Sec. 2560.503-1, 65 FR 70246, 70255 (Nov. 21, 2000).
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Paragraph (b)(2) provides a special timing rule in connection with
qualifying events for which the employer must notify the plan, where
the employer is also the administrator of the plan. Under the special
rule, an election notice must be furnished not later than 44 days after
the date of the qualifying event, or, if the plan provides that COBRA
coverage starts on the date of loss of coverage, the date the qualified
beneficiary loses coverage under the plan. The Department has revised
the final regulation, as suggested by one commenter, to make clear that
the 44-day rule applies only in those cases where the employer is
required to provide notice of a qualifying event to the plan
administrator. Paragraph (b)(2) has also been revised to reflect the
possibility that a plan may adopt a different starting date for COBRA
coverage for different types of qualifying events.
Paragraph (b)(3) of the final regulation contains a special timing
rule for multiemployer plans. No comments were received on this
provision. Accordingly, paragraph (b)(3) is adopted without
modification.
Paragraph (b)(4) of the final regulation sets forth the content
requirements for the election notice. The Department received several
comments on this section and the corresponding model election notice.
Several commenters argued that the regulation required too much
information to be included in the election notice. In this regard,
commenters suggested elimination of HIPAA information, information
about alternative coverage and conversion rights, and plan contact
information because much of that information is available in the SPD.
Conversely, other commenters argued that the election notice did not
include enough information and suggested that the content requirements
be expanded in various ways.
Following a careful review of these comments, the Department has
decided to retain the requirements that HIPAA information and plan
contact information be included in the election notice. The Department
believes it is important that qualified beneficiaries understand that
election or non-election of COBRA continuation coverage may have
significant implications for their future exercise of HIPAA rights and
their ability to obtain health care coverage. The Department is
concerned that the significance of the HIPAA information may be lost if
the election notice merely refers to the SPD for more information about
plan rights. Similarly, the Department believes that qualified
beneficiaries should have ready access to additional information about
COBRA and their rights under the plan. Because all qualified
beneficiaries may not have the plan's SPD, requiring that specific
contact information be included in the election notice is the best way
to ensure that all qualified beneficiaries have access to the available
information.
The Department is persuaded, however, that qualified beneficiaries
would not be adversely affected by elimination of the requirement that
information concerning alternative coverage and conversion rights be
included in the election notice. Accordingly, the final regulation does
not include those items in the list of required content for the
election notice. In making these changes, the Department notes that
information on these subjects is likely to be provided by the plan in
some other form, either in connection with offering the individual a
choice between COBRA coverage and the plan's alternative coverage
options, or at the time that COBRA continuation coverage ends.\15\
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\15\ The COBRA provisions separately require plans to provide
qualified beneficiaries who receive the maximum amount of COBRA
coverage available to them the option of enrollment under a
conversion health plan if such right is otherwise generally
available under the plan. The option must be provided during the
180-day period ending on the expiration date of the period of COBRA
coverage. See ERISA section 602(5).
---------------------------------------------------------------------------
Some commenters requested that the regulation and model election
notice be modified to clarify that the election notice need not
identify by name each qualified beneficiary entitled to elect
continuation coverage. In response to this comment, paragraph
(b)(4)(iii) has been revised to make clear that identification of
qualified beneficiaries may be accomplished either by reference to
their status (e.g., employee, spouse, dependent child covered under the
plan prior to the qualifying event) or by name. The Department intends
that identification by status must be sufficiently detailed to permit
the affected individuals to determine whether they are qualified
beneficiaries. The model election notice has been revised accordingly.
As proposed, the model election notice included an optional
paragraph describing the 65% health coverage tax credit (HCTC) created
by the Trade Act of 2002 (the Trade Act) that may be used if an
administrator believes employees might be eligible for trade adjustment
assistance (TAA) and therefore eligible for the HCTC.\16\ Some
commenters suggested that Trade Act model language be expanded to refer
not only to individuals potentially eligible for the HCTC because of
eligibility for TAA (TAA-eligibles) but also to individuals potentially
eligible for the HCTC because they may be receiving payments from the
Pension Benefit Guaranty Corporation (PBGC-eligibles). Other commenters
requested that the Trade Act paragraph be expanded to include
additional information on how the new second COBRA election period
created by the Trade Act relates to preexisting condition exclusion
periods under HIPAA and how to become certified for TAA. Other
commenters requested that the Department make clear that the election
notice is not required to contain any Trade Act information.
---------------------------------------------------------------------------
\16\ As noted in the preamble to the proposed regulation, it is
the view of the Department that information on the possible
availability of a new second COBRA election period in the event of
TAA eligibility should, pursuant to Sec. 2520.102-3(o), be included
in the summary plan description of a group health plan as part of
the discussion of the continuation coverage provisions of the plan.
See 68 FR 31831, 31833 (May 28, 2003).
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As with the proposed regulation, the final regulation does not
impose any specific disclosure requirement regarding rights and duties
that may arise as a result of the Trade Act. Nonetheless, the
Department has included an optional Trade Act paragraph in the model
election notice to assist administrators who wish to notify potentially
eligible individuals of their rights under the Trade Act as they relate
to continuation coverage. In this regard, the Department has modified
the model election notice Trade Act language to reference both PBGC-
eligibles and TAA-eligibles. With regard to including more detailed
information about Trade Act, the Department believes that the
governmental sources identified in the model election notice represent
the best sources for detailed information on Trade Act-related rights
and procedures.
In addition to the aforementioned comments, the Department received
a number of comments suggesting modifications to the model election
notice to improve its clarity and readability. In finalizing the model
election notice, the Department has taken into account all of these
[[Page 30090]]
suggestions and has made a variety of revisions intended to improve,
clarify, and simplify the model notice.
The Department received a number of comments on the notice
requirements set forth in paragraphs (c) and (d) of proposed Sec.
2590.606-4. Under paragraph (c) of the proposed Sec. 2590.606-4, if a
plan administrator receives a notice of a qualifying event pursuant to
Sec. 2590.606-3 from an individual not eligible to receive
continuation coverage under the plan, the administrator would be
required to provide notice to the individual(s) explaining why he or
she is not entitled to such coverage. This unavailability notice was to
be provided within the same time frame for providing an election
notice, i.e., within 14 days after receipt of the notice of a
qualifying event. Under paragraph (d) of the proposal, the
administrator would be required to provide notice to qualified
beneficiaries in the event that continuation coverage terminates before
the end of its maximum duration. This early termination notice was to
be provided as soon as practicable following the administrator's
determination that continuation coverage shall terminate.
A number of commenters argued that the notice provisions of
paragraphs (c) and (d) should be eliminated entirely. These commenters
generally argued that these notices are not required by statute, that
the notices create serious administrative concerns, that they duplicate
information already required to be disclosed in plan SPDs or election
notices, and that they increase the risk of civil penalties and
litigation for plan sponsors. At the same time, commenters indicated
that many plans already provide similar notifications. A number of
commenters supported these notice requirements, but suggested changes
or clarifications.
With regard to the unavailability notice of paragraph (c), some
commenters suggested that administrators should be required to provide
the notice ``as soon as possible,'' although not later than 14 days
after receiving the notice of qualifying event. Another commenter
argued that the time frame for furnishing the unavailability notice
should conform to the time frame for furnishing notice of a benefit
claim denial. Other commenters requested clarification concerning the
circumstances that would trigger the notice requirement.
After consideration of the comments, the Department has decided to
retain the requirement that notice of unavailability of continuation
coverage be provided, with some modification. It is the view of the
Department that when a participant or beneficiary submits a request to
the plan administrator for COBRA continuation coverage, the individual
has an expectation of coverage unless (or until) he or she is notified
to the contrary. The Department continues to believe that furnishing
the unavailability notice in such circumstances will avoid
misunderstandings in this area. The Department also believes that the
proposed time frame of 14 days, paralleling the time frame for
providing an election notice after receiving a notice of qualifying
event, is appropriate for the unavailability notice. Therefore, the
final regulation retains the time frame of the proposal.
Commenters questioned whether the unavailability notice is required
only after receipt of ``a notice of a qualifying event furnished in
accordance with Sec. 2590.606-3,'' as stated in the proposal, or
whether the unavailability notice must also be provided after receipt
of any qualified beneficiary's notice furnished in accordance with
Sec. 2590.606-3. There appears to be little basis for distinguishing
among the various qualified beneficiary notices that may be required to
be furnished in accordance with Sec. 2590.606-3 on the basis of the
expectations of the individual furnishing the notice. Accordingly, the
Department has modified the language of paragraph (c)(1) to clarify
that the unavailability notice must be furnished when the plan
administrator denies coverage after receiving a notice described in
Sec. 2590.606-3, regardless of the basis of the denial and regardless
of whether the notice involves a first qualifying event, a second
qualifying event, or a request for a disability extension. For example,
the unavailability notice would be required to be provided when a plan
administrator denies continuation coverage because it has been
determined that no qualifying event had occurred or because the
qualified beneficiary did not furnish the notice of qualifying event
notice in a timely manner or did not provide complete information.
With respect to the early termination notice of paragraph (d) of
the proposal, in addition to those commenters opposing the notice
obligation in its entirety, some commenters suggested changes. One
commenter suggested that plan administrators be required to provide an
early termination notice in advance of terminating COBRA coverage and
that plan administrators should not be allowed to combine the early
termination notice with the notice of creditable coverage required to
be provided under HIPAA. Another commenter objected to the proposal's
adoption of the requirement that the early termination notice be
furnished ``as soon as practicable,'' suggesting that a specific time
frame would be more workable. One commenter suggested that the early
termination notice be required only when coverage terminates
``voluntarily'' or for lack of premium payment.
Following consideration of the comments on paragraph (d), the
Department has decided to retain the early termination notice
requirements as proposed. As noted in the proposal, continuation
coverage may be terminated earlier than the end of the maximum period
for many different reasons. The Department continues to believe that
providing a notice of early termination serves an important
administrative function and permits qualified beneficiaries to take
appropriate next steps to protect their access to health coverage,
either on a group or individual basis.
In retaining the notice of early termination of continuation
coverage requirement, the Department is not requiring that the notice
be furnished before COBRA coverage can be terminated or within a
specified time frame. To require notification to be made in advance of
an otherwise permissible early termination of continuation coverage
would extend COBRA continuation coverage beyond the statutory periods,
which would be beyond the Department's interpretive and regulatory
authority. In recognition of the fact that there may be instances when
an administrator is able to furnish an early termination notice in
advance of the early termination of COBRA coverage, the Department has
retained the requirement that notice of an early termination be
furnished as soon as reasonably practicable. The Department believes
that this standard is in the best interest of the qualified
beneficiaries.
The Department further believes that allowing plans to combine
furnishing the early termination notice with the certificate of
creditable coverage required under HIPAA would benefit the qualified
beneficiary by providing related benefit information in a single
information package and would benefit the plan as a result of reduced
administrative costs. For this reason, the Department reiterates the
view expressed in the proposal that nothing in these regulations is
intended to prevent a plan administrator from combining the furnishing
of an early termination notice with the furnishing of the certificate
of creditable coverage.
[[Page 30091]]
One commenter recommended that the Department develop model notices
for the unavailability notice and the early termination notice required
under paragraphs (c) and (d) of Sec. 2590.606-4. The Department has
not adopted this suggestion due to the event-specific nature of the
required notices. In the Department's view, it would be difficult to
develop a single model form for such notices that would serve
adequately to cover every circumstance, or even the most frequent
circumstances, under which COBRA continuation coverage might be denied
or terminated before the end of its maximum period.
C. Standards for Furnishing Notices
As discussed above, the final regulations provide standards for a
variety of notices required to be furnished by and to qualified
beneficiaries, employers, and plan administrators. Several commenters
requested further guidance on the acceptable methods for furnishing the
various notices addressed by the regulations. They also requested
guidance on how to determine, for purposes of the various time limits,
when a notice should be considered to be furnished.
The Department generally recognizes that disclosures may be
furnished through a number of different methods. See Sec. 2520.104b-
1(b) (describing generally appropriate methods for furnishing reports,
statements, notices, and other documents required under title I to
individuals). With regard to general notices, election notices,
unavailability notices, and early termination notices, each of which is
required to be furnished by the plan administrator, the final
regulations expressly provide that such notices must be furnished in a
manner consistent with the standards set out in Sec. 2520.104b-1(b).
See Sec. 2590.606-1(f); Sec. 2590.606-4(f).
Under the standards set by Sec. 2520.104b-1(b), and therefore
under these regulations, a required notice generally should be
considered ``furnished'' by a plan administrator as of the date of
mailing, if mailed by first class mail, certified mail, or Express
Mail; or as of the date of electronic transmission, if transmitted
electronically.\17\ When hand delivery is the chosen method of
delivery, however, a notice would not be considered furnished until
actually received by the individual to whom the notice is directed.\18\
In the absence of written plan procedures to the contrary that are
communicated to participants and beneficiaries, it is the view of the
Department that the same standards would apply to notices of qualifying
event furnished by an employer to the plan administrator and to COBRA
notices provided by covered employees, qualified beneficiaries, and
other persons acting on their behalf to plan administrators.
---------------------------------------------------------------------------
\17\ See Sec. 2520.104b-1(c) (disclosure through electronic
media). The Department recognizes that other methods of furnishing
may be available that, under the actual facts and circumstances,
should be accorded the same deference as electronic transmission and
first class mail.
\18\ The use of interoffice mail for purposes of providing a
notice to an employee should be considered tantamount to hand
delivery and governed by the same standards.
---------------------------------------------------------------------------
The regulations contain one exception to this general rule. Section
2590.606-4(b) expressly provides that the 14-day time limit applicable
to plan administrators for furnishing an election notice will not begin
to run until a plan administrator actually receives a notice furnished
in accordance with the requirements of Sec. 2590.606-2 or Sec.
2590.606-3.
D. Effective and Applicability Dates
The Department received a number of comments expressing concern
about the proposal's statement of the Department's intention to make
final regulations effective and applicable as of the first day of the
first plan year occurring on or after January 1, 2004. Commenters
argued that such a short time period between publication and effective
dates would not provide group health plans sufficient time for an
orderly implementation of the changes necessary to accommodate the
final COBRA continuation coverage notice regulations. The Department
recognizes the importance of providing plans with an adequate period
for making the changes to their COBRA processes required by these final
COBRA notice regulations. It is in the public interest to enable plans
to come into compliance smoothly and economically and to take advantage
of the additional opportunities for administrative efficiency provided
by these regulations. Accordingly, the Department has determined to
provide a period of at least six months after publication of these
final regulations before they will be applicable to notice obligations
arising under group health plans.
In order to avoid confusion concerning the applicability date of
the final rules, each rule (Sec. Sec. 2590.606-1 through 2590.606-4)
has been modified to add a new ``applicability'' paragraph. This
paragraph provides that the regulation applies to notice obligations
that arise on or after the first day of the first plan year beginning
on or after the date that is six months after the date of publication
of the final rules in the Federal Register.\19\ The regulations are
scheduled to become effective sixty days after the date of publication
in the Federal Register.
---------------------------------------------------------------------------
\19\ In response to public concerns about the proposed effective
date, the Department issued a press release expressing its intention
to give group health plans six months after the adoption of final
rules to implement administrative changes required by the new rules.
Press Release, EBSA, Labor Department Announces Proposed Effective
Date of COBRA Regulations Will Be Delayed (September 17, 2003).
---------------------------------------------------------------------------
The preamble to the proposed regulations made clear that plans
could no longer rely upon prior guidance issued by the Department
shortly after the enactment of COBRA, which provided a model general
notice to be used in connection with plans' first becoming covered by
COBRA.\20\ The Department also stated in the proposal that, in the
absence of final regulations, the Department would judge plan
compliance with the COBRA statutory notice requirements under the
standard set by the COBRA conference report: ``[E]mployers are required
to operate in good faith compliance with a reasonable interpretation of
these substantive rules, notice requirements, etc.''\21\ Several
commenters have requested guidance from the Department on whether, in
the interim between issuance of the proposed regulations and a future
applicability date for new final rules, they could rely on the proposed
regulations as a reasonable interpretation of the COBRA statutory
notice requirements that would be viewed by the Department as good
faith compliance. The Department has determined that it is in the
public interest to encourage early compliance with these new standards
and, therefore, will, pending the applicability of the final rules,
view compliance with either the proposed rules or the final rules,
including use of the model notices as proposed or as finalized, to
constitute good faith compliance with the COBRA statutory notice
requirements.
---------------------------------------------------------------------------
\20\ The preamble to the proposed COBRA notice regulations
explained that the early guidance and model general notice contained
in Technical Release 86-2, issued June 26, 1986, no longer
adequately reflected the COBRA provisions due to subsequent
amendments and that use of that model notice would no longer be
considered good faith compliance with the requirements of section
606(a)(1) of the Act. See 68 FR 31832, 31834 n.13 (May 28, 2003).
\21\ H.R. Conf. Rep. No. 99-453 at 563.
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E. Regulatory Impact Analysis
Summary
The regulatory standards promulgated in these regulations will
benefit both
[[Page 30092]]
plan sponsors and participants. They will dispel plan administrators'
uncertainty about how to comply with COBRA notice provisions and reduce
the risk of inadvertent violations. They will help participants and
beneficiaries understand how to exercise their COBRA rights, thereby
averting costly disputes and lost opportunities to elect COBRA
coverage. This will result in an increase in the number of COBRA
elections by qualified beneficiaries. These benefits of the regulations
are expected to outweigh their costs.
New administrative costs imposed by these regulations are limited
because plan sponsors and administrators already distribute notices
pursuant to the COBRA statute, and many of their existing practices
likely already satisfy the requirements of these regulations. The
Department estimates the new administrative costs to be $2.6 million in
the first year that the regulations are effective and $0.9 million
annually in subsequent years. The $0.9 million ongoing annual cost is
attributable to the new requirements to notify qualified beneficiaries
when continuation coverage is unavailable or has been terminated before
the maximum period of coverage has ended. The remaining $1.7 million
first-year cost reflects the cost to plans to review existing notices
and procedures, to make any necessary revisions, and to modify or
develop newly required notices.
The Department also expects the number of COBRA elections to
increase slightly, by between 0.5 percent and 1.0 percent, which will
increase costs to employers. Employers can charge COBRA enrollees the
cost of coverage plus an administrative charge, but those electing
continuation coverage tend to have higher costs and therefore as a
group enjoy a subsidy from plan sponsors equal to about one-third of
the cost of their coverage. If COBRA elections increase, the amount of
the subsidy will increase by a similar proportion, or between $12
million and $24 million annually.
Executive Order 12866
Under Executive Order 12866, the Department must determine whether
the regulatory action is ``significant'' and therefore subject to the
requirements of the Executive Order and subject to review by the Office
of Management and Budget (OMB). Under section 3(f), the order defines a
``significant regulatory action'' as an action that is likely to result
in a rule's (1) having an annual effect on the economy of $100 million
or more, or adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order.
Pursuant to the terms of the Executive Order, it has been
determined that this action is ``significant'' within the meaning of
section 3(f)(4) of the Executive Order and therefore subject to review
by the Office of Management and Budget (OMB).
Costs.--The administrative cost of these regulations is expected to
be modest, primarily because COBRA's statutory provisions have been in
effect since 1986. As a result, most group health plans, plan
administrators, and health insurance issuers already have developed
forms and procedures for the administration of COBRA notices. The
Department estimates that the regulations will increase administrative
costs by $2.6 million in the first year and $0.9 million annually in
subsequent years.
Commenters on the proposed regulations remarked in general terms on
the importance of controlling costs in relation to the benefits
achieved for qualified beneficiaries. One commenter indicated that
revising automated systems that generate COBRA notices would be more
costly than the Department had estimated in connection with the
proposal because many COBRA administrators currently issue COBRA
notices that narrowly target individual audiences, such as spouses or
children. Although some COBRA administrators choose to include
additional information in their notices for certain types of qualified
beneficiaries, the Department continues to believe that few COBRA
administrators will be required to make significant changes in order to
comply with the basic requirements of these notice provisions. COBRA
administrators have in place processes that are, in fact, flexible
enough to provide notices that satisfy the need for a generic product
suitable for use by multiple plans while remaining sufficiently
adaptable to include detailed information unique to the plan or
individual qualified beneficiary.
Economies of scale also tend to moderate COBRA administrative costs
because the majority of notice obligations are met through the purchase
of COBRA administrative services from a number of COBRA administrators
that is small relative to the number of group health plans they serve.
In addition, not all COBRA administrators or plans will be required to
make substantial changes. In estimating the impact of the proposed
regulations and model forms, the Department assumed that many COBRA
administrators and plans currently use notices that, for the most part,
are in compliance with the requirements of the regulations. Comments
received did not support a revision of that assumption for the estimate
of the economic impact of the final rule. In response to comments,
however, the Department has made certain clarifications to the proposed
regulations with respect to content and format of the notices and has
clarified the model notices accordingly. These changes, discussed more
fully earlier in the preamble, will expand opportunities for COBRA
administrators to fulfill plans' COBRA notice obligations within the
context of their current practices. The clarification of the scope of
applicability of the unavailability notice in Sec. 2590.606-4(c) has
resulted in an increase in the estimated cost of the final regulations
of $204,000.
The Department expects the number of COBRA elections to increase
slightly as a result of the implementation of these final regulations.
Consequently, a portion of the cost of health care coverage will
transfer from those new COBRA enrollees to plan sponsors, thereby
increasing the subsidy from employers to COBRA enrollees. The transfer
of costs arises because surveys indicate that although qualified
beneficiaries that elect COBRA coverage pay a cost consisting of the
applicable premium amount for group coverage plus an administrative
charge, the actual average cost of continuation coverage is somewhat
higher than the combined amount paid by the qualified beneficiary.
Payment by a plan sponsor of the difference in these costs constitutes
a subsidy of a qualified beneficiary's continuation coverage. As such,
the transfer represents a cost to plan sponsors and a benefit to COBRA
enrollees.
In estimating the amount of the transfer, the Department observed
that the number of inquiries the Department receives annually
concerning COBRA, about 59,000, is equivalent to just more than 1
percent of the estimated 5 million annual COBRA qualifying events. It
is likely that some but not all of these inquiries reflect notice
[[Page 30093]]
inadequacies that these regulations would correct. The Department also
noted that approximately 19 percent of qualifying events result in
elections, and that the average annualized subsidy from plan sponsors
to COBRA enrollees amounts to about $2,500 per enrollee. If between 0.5
percent and 1.0 percent of qualifying events involve missed
opportunities due to inadequate notice, and 19 percent of those events
would have resulted in elections, then the regulations, by correcting
notice deficiencies, would increase COBRA enrollees by between 4,750
and 9,500 each year, and the aggregate subsidy by between $12 million
and $24 million. Expressed in unit costs, for every one percent
increase in the number of qualified beneficiaries who elect
continuation coverage due to improved notices and procedures, there is
an estimated incremental increase in cost of $24 million to plan
sponsors or an average of approximately $58 per plan.
Both the administrative cost and the transfer cost will be borne by
the 411,000 group health plans, covering a total of about 111 million
participants and their dependents, that are currently required to offer
continuation coverage. Cost estimates recognize only the cost of
changes to existing practices that are likely to be associated with
these rules; they exclude the pre-regulation impact of the statute
itself. Estimates are grounded in an assumption as to the entity
expected to perform the needed work (e.g., a health insurer or
professional administrator); the assumption should not be interpreted
to bear on any party's legal responsibility for COBRA compliance. The
costs of the regulations are equal to only one one-hundredth of 1
percent or less of total group health plan costs to entities subject to
COBRA. Because the magnitude of the overall increase in costs to plans
is small, the Department believes that it will not have a consequential
effect on the availability of health coverage for employees.
Benefits.--The benefits of these rules arise from improved
administrative efficiency, reduced exposure to risk, and from the
potential avoidance of some unnecessary losses of group health plan
coverage by qualified beneficiaries.
Improvements in the consistency and quality of information provided
to participants and beneficiaries will help them understand their
rights and limit their risk of losing the opportunity to elect COBRA
coverage. Inconsistent procedures and notices that are not adequate as
to content, timing, and form are known to generate questions, delays,
disputes, and duplications of effort that require the expenditure of
additional resources by both plan administrators and participants and
beneficiaries to resolve. Although the magnitude of the costs and
potential savings associated with administrative inefficiencies is
unknown, clearer and more uniform standards should serve to avoid the
otherwise unnecessary expense associated with rectifying procedural and
substantive notice inadequacies. Providing greater certainty to plan
sponsors and plan administrators as to how their notice obligations can
be met should also limit risks to both plans and qualified
beneficiaries. Plan sponsors and plan administrators who comply with
this guidance will be less likely to be subjected to costly disputes,
litigation, or penalties as a result of their compliance with this
guidance.
The benefit to COBRA enrollees exceeds the financial value of the
transfer insofar as the enrollees will gain access to high-value group
coverage rather than having to choose between purchasing generally
lower-value individual insurance, usually at a significantly higher
rate than a group rate, or going without coverage altogether.
Individual coverage is more costly and less efficient due in large part
to significantly higher costs of individual policy administration. The
uninsured are also known to seek preventive care less frequently and to
delay or forgo treatment, which may lead to less favorable health
outcomes and higher social costs for acute care at a later time.
Interruptions in group health plan coverage can ultimately limit the
portability of group coverage, as well. A reduction in the numbers of
losses of coverage that result from notification failures results in
efficiency gains to the extent that the qualified beneficiaries elect
group health plan coverage rather than individual coverage.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3501-3520) (PRA 95), the Department submitted the information
collection request (ICR) included in the Notice Requirements of the
Health Care Continuation Coverage Provisions to the Office of
Management and Budget (OMB) for review and clearance at the time the
Notice of Proposed Rulemaking (NPRM) was published. In accordance with
5 CFR 1320.11(c) of the PRA, OMB issued a Notice of Action, on June 6,
2003, deferring action on the request for approval until the submission
of the ICR in connection with the final rulemaking. Action was deferred
in order to provide the Department with an opportunity to include
changes resulting from comments on the proposed regulations.
Accordingly, the Department has submitted the ICR included in the
Notice of Final Regulations for review and clearance by OMB.
The Department has issued these rules to set minimum standards for
the timing and content of the notices required under the continuation
coverage provisions of part 6 of title I of ERISA, and to establish
uniform standards for administering the notice process. In very general
terms, the statute requires that qualified beneficiaries be offered the
opportunity to elect to continue group health coverage after losses of
coverage due to death of the covered employee, termination of
employment or reduction of hours of employment, divorce or legal
separation of the covered employee from the employee's spouse, loss of
dependent child status, the covered employee's becoming entitled to
Medicare, or bankruptcy of an employer that affects covered retirees
and their families. Qualified beneficiaries may include covered
employees, spouses of covered employees, and dependent children of
covered employees. Coverage generally extends for up to 18 or 36
months, depending on the nature of the qualifying event.
The regulations set standards for six types of notices and provide
two model notices in the following sections: General Notice of
Continuation Coverage; Notice Requirements for Employers; Notice
Requirements for Covered Employees and Qualified Beneficiaries; and
Notice Requirements for Plan Administrators. The last section covers a
notice of right to elect continuation coverage, a notice of
unavailability of continuation coverage, and a notice of early
termination of continuation coverage. Each of the regulations includes
one or more ICRs. It should be noted that this Paperwork Reduction Act
analysis includes the cost of the statute (the COBRA provisions) as
well as the cost of the discretion exercised in this rulemaking. These
costs were developed in the manner described below.
In order to develop estimates of the cost of the review, revision,
development, and distribution of COBRA notices, it was first necessary
to determine the numbers of participants and beneficiaries in plans
that are required to offer COBRA coverage (generally, plans sponsored
by employers with 20 or more employees), the numbers of beneficiaries
who reside at addresses that are different from related covered
employees, and the rates of occurrences of qualifying events that give
rise to notice obligations. Also
[[Page 30094]]
required were estimates of the number of entities, such as group health
insurance issuers and professional administrators, that would review
COBRA notices; the number that would consequently revise COBRA notices;
and the time required to do so for each type of notice.
The Department derived its estimates of 55.8 million covered
employees, 55 million beneficiaries, and 2.5 million COBRA enrollees
from the February and March 2001 Current Population Survey (CPS; Census
Bureau household surveys), the 2000 Medical Expenditure Panel Survey,
Household and Insurance Components (MEPS comprises surveys of
households and private establishments conducted jointly by the Census
Bureau and the Agency for Healthcare Research and Quality), and the
1996 Panel of the Survey of Income and Program Participation (SIPP; a
Census Bureau longitudinal household survey). These data sources also
indicate that 67,000 dependents live outside the household of related
employees. Frequency rates for qualifying events were also developed
from MEPS and SIPP.
An estimate of the number of plans covering these employees and
dependents was also needed. About 50,000 group health plans currently
file the Form 5500-Annual Return/Report of Employee Benefit Plan each
year, including 38,000 large plans, and 8,000 small plans, and a number
of plans that may not be required to file. For the purpose of
regulatory analysis, plans with fewer than 100 participants are
considered to be small. Because the majority of small group health
plans are not required to file Form 5500, the number of such plans must
be estimated from other data sources. CPS and MEPS data were used to
derive an estimate of the number of employers that offer group health
coverage, and to exclude employers within that group that have fewer
than 20 employees. This estimate indicates that these regulations will
affect about 411,000 plans, 38,000 of which are large, and 373,000 of
which are small. The number of participants in large plans is estimated
at 43.5 million. The number of participants in small plans is estimated
to be 12.3 million.
The preparation and distribution of notices (discussed below) is
accounted for as cost rather than hours because most COBRA
administration is accomplished through the purchase of services for
which fees are paid. Start-up costs that arise from these regulations
pertain to the review and revision of existing forms and procedures and
the development of the new early termination and unavailability
notices. The costs for completing and distributing notices are ongoing
operating costs.
The Department has assumed that all COBRA administrators will
review their existing forms and procedures in response to promulgation
of this guidance, and that some of those plan administrators will need
to revise their notices and procedures. In order to derive an estimate
of the number of entities that will review forms and procedures, the
Department looked at the number of health insurers offering group
products and the number of professional administrators providing
services to group health plans. This results in an estimate of about
3,000 entities that perform COBRA administration for the majority of
all plans. All of these entities are expected to review all of their
notices and procedures in response to this regulatory guidance. The
reviews are assumed to require 2 hours each for the general notice and
the election notice. The reviews are expected to be conducted by
professionals at the level of financial managers at a cost of $68 per
hour.
In order to estimate the number of service providers that would be
required to revise their existing notices, the Department first
examined its data pertaining to the nature of the telephone inquiries
it receives. These data show that about 59,000 inquiries pertaining to
COBRA are received each year. Although the portion of these inquiries
that pertain to notice provisions is unknown, as is the number of COBRA
notification issues that do not give rise to contact with the
Department, this number provides the only available proxy for a rate of
notice-related difficulties. Given the roughly 5 million COBRA election
notices provided each year, the rate of notice inadequacies is assumed
to be about 1%. Because some COBRA inquiries received by the Department
pertain to issues other than notices, the number of inadequate notices
may range from .5% to 1% but 1% has been used for purposes of these
estimates.
These regulations will require service providers to revise the .5%
to 1% of notices that historically have been inadequate. The cost of
these revisions will be driven in part by the number of service
providers affected. The proportion of service providers affected may be
larger than the proportion of notices that are inadequate. If
inadequate notices are concentrated among smaller service providers,
then the proportion of service providers affected will be more than .5%
to 1%. The Department assumed that 3% of all service providers, or 90
providers, will be affected.
Modifications to the general notice and the election notice are
assumed to require two hours per notice, at $68 per hour for a service
provider. Additional start-up costs include the cost of four hours of
professional time, at $68 per hour, to modify or develop the employer
and employee notices and to develop the two newly required early
termination and unavailability notices.
Ongoing operating costs arise from completing a notice upon the
occurrence of each event that gives rise to a notice obligation and
from distributing the completed notice. The Department did not
attribute any ongoing operating cost to the provision of the general
notice to covered employees and their spouses who reside with them.
Under this final rule, a plan administrator may satisfy the general
notice requirement by including the required content in the SPD and
furnishing a single notice addressed to both the covered employee and
the covered employee's spouse. The Department did, however, attribute
an ongoing operating cost to completing and distributing the general
notice to a spouse of a covered employee who resides at a separate
address.
No burden is included for completing the employer's notice because
it involves only information that the employer has at hand in its
customary personnel practices. Similarly, no completion burden is
calculated for the qualified beneficiaries' notices because this
information is limited, readily available, and would be provided as a
usual practice by only the qualified beneficiary who wishes to elect
continuation coverage.
No cost has been included for the completion or distribution of the
notice of unavailability of continuation coverage because there is
currently no basis for determining the number of these notices that
might be sent. The Department has assumed, however, that due to the
clear and consistent information provided in the general notice, plan
administrators will distribute only a limited number of unavailability
notices annually and that the associated cost will be very small.
Finally, the cost for completing the election notice, at 4 minutes
per notice, and the early termination notice, at 1 minute per notice,
is estimated at $34 per hour. The 4 minutes required to complete an
election notice represent a reduction from the 5 minutes originally
calculated in the proposed regulation. The one minute saved as a result
of clarifications in the final regulations regarding how plans may
identify
[[Page 30095]]
qualified beneficiaries for purposes of the election notice, is
expected to reduce the burden for completing election forms. As such,
the estimated operating and maintenance costs for the ICR have been
reduced by an estimated $2.7 million.
In determining the cost for distribution of COBRA notices, the
Department noted in the proposed regulations that due to the nature of
the rights and obligations involved in COBRA notice requirements most
plan administrators tend not to choose electronic distribution methods
for COBRA notices. The Department further noted that plans are not
precluded from using electronic distribution methods that comply with
regulations at 29 CFR.104b-1(b) and (c) and specifically requested
comment on the use of electronic technologies in COBRA notice
administration. The Department received one comment attesting to the
availability of electronic information systems that are capable of
transmitting COBRA notices and disclosures, and that are efficient,
legally protective, and cost effective. The Department recognizes that
there may be cost savings when information is transmitted
electronically and that some plans may choose to use electronic
technologies to fulfill their requirements. For purposes of the PRA,
however, the Department has conservatively estimated costs based on
first-class mail, which is currently the most common method for
delivery of COBRA information. Postage and materials for distribution
are estimated at $0.38 per notice. No assumption has been made as to
the number of these notices that will be distributed electronically.
The application of these assumptions results in an estimated annual
distribution of 66,900 general notices, 2,809,000 employer notices,
651,000 qualified beneficiary notices, 4,699,000 plan administrator
election notices, and 1,000,000 early termination notices. The number
of unavailability notices is unknown.
Type of Review: New collection.
Agency: Employee Benefits Security Administration, Department of
Labor.
Title: Notice Requirements of the Health Care Continuation Coverage
Provisions.
OMB Number: 1210-0NEW.
Affected Public: Individuals or households; Business or other for-
profit; Not-for-profit institutions.
Respondents: 411,000.
Frequency of Response: On occasion.
Responses: 9,225,900.
Estimated Total Burden Hours: None.
Total Annualized Capital/Startup Costs: 1,656,500.
Total Burden Cost (Operating and Maintenance): $14,723,400.
Total Annualized Cost: $16,379,900.
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes
certain requirements with respect to federal rules that are subject to
the notice and comment requirements of section 553(b) of the
Administrative Procedure Act (5 U.S.C. 551 et seq.) and that are likely
to have a significant economic impact on a substantial number of small
entities. Unless an agency certifies that a rule will not have a
significant economic impact on a substantial number of small entities,
section 604 of the RFA requires that the agency present a final
regulatory flexibility analysis at the time of the publication of the
NFRM describing the impact of the rule on small entities. Small
entities include small businesses, organizations, and governmental
jurisdictions.
For purposes of analysis under the RFA, EBSA proposes to continue
to consider a small entity to be an employee benefit plan with fewer
than 100 participants. The basis of this definition is found in section
104(a)(2) of the Act, which permits the Secretary to prescribe
simplified annual reports for pension plans that cover fewer than 100
participants. Under section 104(a)(3), the Secretary may also provide
for exemptions or simplified annual reporting and disclosure
requirements for welfare benefit plans. Pursuant to the authority of
section 104(a)(3), the Department has previously issued regulations at
29 CFR 2520.104-20, 2520.104-21, 2520.104-41, 2520.104-46, and
2520.104b-10, providing for simplified reporting requirements and
limited exemptions from reporting and disclosure requirements for small
plans, including unfunded or insured welfare plans covering fewer than
100 participants, that satisfy certain other requirements.
Further, while some large employers may have small plans, in
general most small plans are maintained by small employers. Thus, EBSA
believes that assessing the impact of this rule on small plans is an
appropriate substitute for evaluating the effect on small entities. The
definition of small entity considered appropriate for this purpose
differs, however, from a definition of small business based on size
standards promulgated by the Small Business Administration (SBA) (13
CFR 121.201) pursuant to the Small Business Act (15 U.S.C. 631 et
seq.). At the time of the publication of the NPRM, the Department
requested comments on the appropriateness of the size standard used in
evaluating the impact of this rule on small entities. No comments were
received.
On the basis of this definition, EBSA estimates that the
regulations will not have a significant impact on a substantial number
of small entities. In support of this conclusion, the Department has
conducted a final regulatory flexibility analysis, which is summarized
below.
These regulations provide plans and qualified beneficiaries with
greater certainty as to how the notice obligations of COBRA can be met.
Inquiries to the Department, as well as public comment in response to
the 1997 RFI, indicated that service providers and plan administrators
would welcome guidance that would provide greater administrative
efficiency and reduce exposure to risk resulting from procedural or
substantive failures to meet notification requirements. Improvements in
the quality of information provided to participants and beneficiaries
is expected to help them understand their rights and limit their risk
of losing the opportunity to elect the COBRA coverage that is required
to be offered.
The COBRA provisions require a group health plan to offer qualified
beneficiaries the opportunity to elect continuation coverage when they
would otherwise lose group health coverage as a result of certain
events described in the statute as ``qualifying events.'' Under section
608 of ERISA, the Secretary has the authority to carry out the
provisions of part 6 of title I of ERISA. Further, the Conference
Report that accompanied COBRA provided that the Secretary has the
authority to issue regulations implementing the notice and disclosure
provisions of part 6 of ERISA. The Department's objective in issuing
the regulations is to provide guidelines that will assure plan
administrators that they are in compliance with the notification
provisions of COBRA and that participants and beneficiaries have
sufficient information to exercise their COBRA rights. Small plans will
benefit from clarifications about the content and timing of notices and
from the likelihood that fewer determinations about COBRA coverage will
be delayed, disputed, or appealed. In addition, an increased number of
qualified beneficiaries in small health plans will be able to obtain
COBRA continuation coverage.
The Department believes that, because of the expertise required,
small plans will use COBRA administrators to review notices and to
modify or adapt the Department's model notices for use
[[Page 30096]]
by the plan administrator. Generally, COBRA administrators offer plans
on-going administrative services, such as notifying employees about
their group health plan continuation coverage, distributing and
processing election forms, collecting and applying premium payments,
and monitoring COBRA compliance. Small plans, in particular, are less
likely to have in-house capabilities to handle these administrative
tasks. For a service provider, reviewing and adopting or modifying
forms for plans will result in some direct cost. COBRA administrators
may choose to absorb some of the cost in order to maintain competitive
products; others may charge the cost to their client plans. Where these
costs are charged to plans, the cost will most likely be minimized
because of the economies of scale inherent in the use of standardized
forms and procedures. Costs to small plans are further reduced because
of the large number of small plans that share the cost burden; there
are approximately seven times as many small plans as large plans.
Finally, to further reduce costs, the Department has provided two model
notices that can be adapted by COBRA administrators for use by
individual single-employer plans.
The Department estimates that there are approximately 2.5 million
plans, each with fewer than 100 participants, that are considered small
group health plans under the Department's definition. Among these,
COBRA applies to only those plans with 20 or more employees, or 373,000
plans, with a total of approximately 12.3 million participants. While
the majority of group health plans subject to COBRA are small plans,
participation in those plans represents only about 22% of participation
in all plans covered by COBRA.
The cost estimates for small plan compliance recognize only the
cost of changes to existing practices associated with the regulations;
they exclude the impact of the statute itself. Costs result from the
likelihood that COBRA administrators may be required to modify two
notices currently used by plans and may modify or develop other
notices, including the two new early termination and unavailability
notices. The cost to small group health plans to review and modify
existing notices is estimated at $275,900. The cost to develop the two
new notices and to complete and distribute the early termination notice
is estimated at $299,400. No costs have been estimated for completion
and distribution of the unavailability notice because the number of
notices that might be sent cannot reasonably be determined; it is
expected, however, that, with the additional clarity provided by the
general notice regulation, the number of unavailability notices
required to be sent will be small. The total cost to small plans for a
service provider's assistance in reviewing, modifying, or developing
notices is estimated to be $575,300, or $1.54 per small plan. The
comparable average cost to large plans is $53.09 per plan.
Employers with small plans will also incur transfer costs as a
result of an increase in the number of elections of continuation
coverage by qualified beneficiaries who would have lost the opportunity
to elect COBRA coverage absent improved notices and procedures. A
portion of the cost of health care coverage previously borne by these
individuals will be transferred to plan sponsors. However, because
there are fewer participants in small plans, the per-plan transfer
costs are considerably less than for large plans. The potential
transfer cost to small plans is estimated to range between $2.6 million
and $5.2 million, depending on the number of qualified beneficiaries
who will elect COBRA coverage. The rate of potential losses of
opportunity to elect COBRA coverage is estimated to fall between .5%
and 1%. This represents an average of $7 to $14 per small plan. The
comparable cost to large plans ranges from $9.4 million to $18.7
million, an average of $242 to $484 per plan. At the upper bound, the
total estimated cost of the regulations for 373,000 small plans is $5.7
million, or an average of $15 per plan.
The basis for the regulations lies in the notice and disclosure
provisions of part 6 of title I of ERISA. The regulations do not
duplicate, overlap, or conflict with other Federal rules. The COBRA
provisions have been in effect for many years. Accordingly, most plan
administrators and COBRA administrators have developed procedures to
comply with their statutory obligations. The regulations merely seek to
provide additional, detailed guidance that will clarify a plan's
administrative obligations and assure plan administrators and COBRA
administrators that, in complying with the regulations, they have
satisfied their statutory obligations.
The Department has attempted to minimize the burden of the review
and potential revision of existing notices undertaken in response to
this guidance by including model notices that can be adapted to plans'
specific circumstances. This should lessen the use of resources for
small and large plans alike.
Unfunded Mandates Reform Act
For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4), as well as Executive Order 12875, this rule does not include
any federal mandate that may result in expenditures by state, local, or
tribal governments in the aggregate of more than $100 million, or
increased expenditures by the private sector of more than $100 million.
Small Business Regulatory Enforcement Fairness Act
The rule being issued here is subject to the Congressional Review
Act provisions of the Small Business Regulatory Enforcement Fairness
Act of 1996 (5 U.S.C. 801 et seq.) and has been transmitted to Congress
and the Comptroller General for review. The rule is not a ``major
rule,'' as that term is defined in 5 U.S.C. 804, because it is not
likely to result in (1) an annual effect on the economy of $100 million
or more; (2) a major increase in costs or prices for consumers,
individual industries, or Federal, State, or local government agencies,
or geographic regions; or (3) significant adverse effects on
competition, employment, investment, productivity, innovation, or on
the ability of United States-based enterprises to compete with foreign-
based enterprises in domestic or export markets.
Federalism Statement
Executive Order 13132 (Aug. 4, 1999) outlines fundamental
principles of federalism and requires the adherence to specific
criteria by Federal agencies in the process of their formulation and
implementation of policies that have substantial direct effects on the
States, the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government. This rule does not have federalism
implications because it has no substantial direct effect on the States,
on the relationship between the national government and the States, or
on the distribution of power and responsibilities among the various
levels of government. Section 514 of ERISA provides, with certain
exceptions specifically enumerated, that the provisions of titles I and
IV of ERISA supersede any and all laws of the States as they relate to
any employee benefit plan covered under ERISA. The requirements
implemented in this rule do not alter the fundamental provisions of the
statute with respect to employee benefit plans, and as such would have
no implications for the States or the
[[Page 30097]]
relationship or distribution of power between the national government
and the States.
List of Subjects in 29 CFR Part 2590
Continuation coverage, Disclosure, Employee benefit plans, Group
health plans, Health care, Medical child support, Reporting and
recordkeeping requirements.
0
For the reasons set forth in the preamble, the Department amends
chapter XXV, subchapter L, part 2590 of title 29 of the Code of Federal
Regulations as follows:
Subchapter L--Group Health Plans
PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLANS
0
1. The heading of subchapter L is revised to read as shown above.
0
2. The heading of part 2590 is revised to read as shown above.
0
3. The authority citation for part 2590 is revised to read as follows:
Authority: 29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-
1183, 1185, 1185a, 1185b, 1191, 1191a, 1191b, and 1191c; sec.
401(b), Pub. L. 105-200, 112 Stat. 645; and Secretary of Labor's
Order No. 1-2003, 68 FR 5374 (Feb. 3, 2003).
Subpart A--[Amended]
0
4. Part 290, Subpart A, is amended by adding Sec. Sec. 2590.606-1
through 2590.606-4 to read as follows:
Sec. 2590.606-1. General notice of continuation coverage.
(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. (1) 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 Sec. 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.
(2) 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.
(3) 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 Sec. 2590.606-4(b) shall be deemed to satisfy the
requirements of this section.
(c) Content of notice. The notice required by paragraph (a) of this
section shall be written in a manner calculated to be understood by the
average plan participant and shall contain the following information:
(1) The name of the plan under which continuation coverage is
available, and the name, address and telephone number of a party or
parties from whom additional information about the plan and
continuation coverage can be obtained;
(2) A general description of the continuation coverage under the
plan, including identification of the classes of individuals who may
become qualified beneficiaries, the types of qualifying events that may
give rise to the right to continuation coverage, the obligation of the
employer to notify the plan administrator of the occurrence of certain
qualifying events, the maximum period for which continuation coverage
may be available, when and under what circumstances continuation
coverage may be extended beyond the applicable maximum period, and the
plan's requirements applicable to the payment of premiums for
continuation coverage;
(3) An explanation of the plan's requirements regarding the
responsibility of a qualified beneficiary to notify the administrator
of a qualifying event that is a divorce, legal separation, or a child's
ceasing to be a dependent under the terms of the plan, and a
description of the plan's procedures for providing such notice;
(4) An explanation of the plan's requirements regarding the
responsibility of qualified beneficiaries who are receiving
continuation coverage to provide notice to the administrator of a
determination by the Social Security Administration, under title II or
XVI of the Social Security Act (42 U.S.C. 401 et seq. or 1381 et seq.),
that a qualified beneficiary is disabled, and a description of the
plan's procedures for providing such notice;
(5) An explanation of the importance of keeping the administrator
informed of the current addresses of all participants or beneficiaries
under the plan who are or may become qualified beneficiaries; and
(6) A statement that the notice does not fully describe
continuation coverage or other rights under the plan and that more
complete information regarding such rights is available from the plan
administrator and in the plan's SPD.
(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 employer or a covered employee's
spouse to whom notice is provided in accordance with this section.
(e) Notice in summary plan description. A plan administrator may
satisfy the requirement to provide notice in accordance with this
section by including the information described in paragraphs (c)(1),
(2), (3), (4), and (5) of this section in a summary plan description
meeting the requirements of Sec. 2520.102-3 of this chapter furnished
in accordance with paragraph (b) of this section.
(f) Delivery of notice. The notice required by this section shall
be furnished in a manner consistent with the requirements of Sec.
2520.104b-1 of this chapter, including paragraph (c) of that section
relating to the use of electronic media.
(g) Model notice. The appendix to this section contains a model
notice that is intended to assist administrators in discharging the
notice obligations of this section. Use of the model notice is not
mandatory. The model notice reflects the requirements of this section
as they would apply to single-employer group health plans and must be
modified if used to provide notice with respect to other types of group
health plans, such as multiemployer plans or plans
[[Page 30098]]
established and maintained by employee organizations for their members.
In order to use the model notice, administrators must appropriately add
relevant information where indicated in the model notice, select among
alternative language, and supplement the model notice to reflect
applicable plan provisions. Items of information that are not
applicable to a particular plan may be deleted. Use of the model
notice, appropriately modified and supplemented, will be deemed to
satisfy the notice content requirements of paragraph (c) of this
section.
(h) Applicability. This section shall apply to any notice
obligation described in this section that arises on or after the first
day of the first plan year beginning on or after November 26, 2004.
BILLING CODE 4510-29-P
[[Page 30099]]
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BILLING CODE 4910-29-C
Sec. 2590.606-2. Notice requirement for employers.
(a) General. Pursuant to section 606(a)(2) of the Employee
Retirement Income Security Act of 1974, as amended (the Act), except as
otherwise provided herein, the employer of a covered employee under 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, notice to the administrator of the plan of the occurrence of a
qualifying event that is the covered employee's death, termination of
employment (other than by reason of gross misconduct), reduction in
hours of employment, Medicare entitlement, or a proceeding in a case
under title 11, United States Code, with respect to the employer from
whose employment the covered employee retired at any time.
(b) Timing of notice. The notice required by this section shall be
furnished to the administrator of the plan--
(1) In the case of a plan that provides, with respect to a
qualifying event, pursuant to section 607(5) of the Act, that
continuation coverage and the applicable period for providing notice
under section 606(a)(2) of the Act shall commence on the date of loss
of coverage, not later than 30 days after the date on which a qualified
beneficiary loses coverage under the plan due to the qualifying event;
(2) In the case of a multiemployer plan that provides, pursuant to
section 606(a)(2) of the Act, for a longer period of time within which
employers may provide notice of a qualifying event, not later than the
end of the period provided pursuant to the plan's terms for such
notice; and
(3) In all other cases, not later than 30 days after the date on
which the qualifying event occurred.
(c) Content of notice. The notice required by this section shall
include sufficient information to enable the administrator to determine
the plan, the covered employee, the qualifying event, and the date of
the qualifying event.
(d) Multiemployer plan special rules. This section shall not apply
to any employer that maintains a multiemployer plan, with respect to
qualifying events affecting coverage under such plan, if the plan
provides, pursuant to section 606(b) of the Act, that the administrator
shall determine whether such a qualifying event has occurred.
(e) Applicability. This section shall apply to any notice
obligation described in this section that arises on or after the first
day of the first plan year beginning on or after November 26, 2004.
Sec. 2590.606-3. Notice requirements for covered employees and
qualified beneficiaries.
(a) General. In accordance with the authority of sections 505 and
606(a)(3) of the Employee Retirement Income Security Act of 1974, as
amended (the Act), this section sets forth requirements for group
health plans subject to the continuation coverage requirements of part
6 of title I of the Act with respect to the responsibility of covered
employees and qualified beneficiaries to provide the following notices
to administrators:
(1) Notice of the occurrence of a qualifying event that is a
divorce or legal separation of a covered employee from his or her
spouse;
(2) Notice of the occurrence of a qualifying event that is a
beneficiary's ceasing to be covered under a plan as a dependent child
of a participant;
(3) Notice of the occurrence of a second qualifying event after a
qualified beneficiary has become entitled to continuation coverage with
a maximum duration of 18 (or 29) months;
(4) Notice that a qualified beneficiary entitled to receive
continuation coverage with a maximum duration of 18 months has been
determined by the Social Security Administration, under title II or XVI
of the Social Security Act (42 U.S.C. 401 et seq. or 1381 et seq.)
(SSA), to be disabled at any time during the first 60 days of
continuation coverage; and
(5) Notice that a qualified beneficiary, with respect to whom a
notice described in paragraph (a)(4) of this section has been provided,
has subsequently been determined by the Social Security Administration,
under title II or XVI of the SSA to no longer be disabled.
(b) Reasonable procedures. (1) A plan subject to the continuation
coverage requirements shall establish reasonable procedures for the
furnishing of the notices described in paragraph (a) of this section.
(2) For purposes of this section, a plan's notice procedures shall
be deemed reasonable only if such procedures:
(i) Are described in the plan's summary plan description required
by Sec. 2520.102-3 of this chapter;
(ii) Specify the individual or entity designated to receive such
notices;
(iii) Specify the means by which notice may be given;
(iv) Describe the information concerning the qualifying event or
determination of disability that the plan deems necessary in order to
provide continuation coverage rights consistent with the requirements
of the Act; and
(v) Comply with the requirements of paragraphs (c), (d), and (e) of
this section.
(3) A plan's procedures will not fail to be reasonable, pursuant to
this section, solely because the procedures require a covered employee
or qualified beneficiary to utilize a specific form to provide notice
to the administrator, provided that any such form is easily available,
without cost, to covered employees and qualified beneficiaries.
(4) If a plan has not established reasonable procedures for
providing a notice required by this section, such notice shall be
deemed to have been provided when a written or oral communication
identifying a specific
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event is made in a manner reasonably calculated to bring the
information to the attention of any of the following:
(i) In the case of a single-employer plan, the person or
organizational unit that customarily handles employee benefits matters
of the employer;
(ii) In the case of a plan to which more than one unaffiliated
employer contributes, or which is established or maintained by an
employee organization, either the joint board, association, committee,
or other similar group (or any member of any such group) administering
the plan, or the person or organizational unit to which claims for
benefits under the plan customarily are referred; or
(iii) In the case of a plan the benefits of which are provided or
administered by an insurance company, insurance service, or other
similar organization subject to regulation under the insurance laws of
one or more States, the person or organizational unit that customarily
handles claims for benefits under the plan or any officer of the
insurance company, insurance service, or other similar organization.
(c) Periods of time for providing notice. A plan may establish a
reasonable period of time for furnishing any of the notices described
in paragraph (a) of this section, provided that any time limit imposed
by the plan with respect to a particular notice may not be shorter than
the time limit described in this paragraph (c) with respect to that
notice.
(1) Time limits for notices of qualifying events. The period of
time for furnishing a notice described in paragraph (a)(1), (2), or (3)
of this section may not end before the date that is 60 days after the
latest of:
(i) The date on which the relevant qualifying event occurs;
(ii) The date on which the qualified beneficiary loses (or would
lose) coverage under the plan as a result of the qualifying event; or
(iii) The date on which the qualified beneficiary is informed,
through the furnishing of the plan's summary plan description or the
notice described in Sec. 2590.606-1, of both the responsibility to
provide the notice and the plan's procedures for providing such notice
to the administrator.
(2) Time limits for notice of disability determination. (i) Subject
to paragraph (c)(2)(ii) of this section, the period of time for
furnishing the notice described in paragraph (a)(4) of this section may
not end before the date that is 60 days after the latest of:
(A) The date of the disability determination by the Social Security
Administration;
(B) The date on which a qualifying event occurs;
(C) The date on which the qualified beneficiary loses (or would
lose) coverage under the plan as a result of the qualifying event; or
(D) The date on which the qualified beneficiary is informed,
through the furnishing of the summary plan description or the notice
described in Sec. 2590.606-1, of both the responsibility to provide
the notice and the plan's procedures for providing such notice to the
administrator.
(ii) Notwithstanding paragraph (c)(2)(i) of this section, a plan
may require the notice described in paragraph (a)(4) of this section to
be furnished before the end of the first 18 months of continuation
coverage.
(3) Time limits for notice of change in disability status. The
period of time for furnishing the notice described in paragraph (a)(5)
of this section may not end before the date that is 30 days after the
later of:
(i) The date of the final determination by the Social Security
Administration, under title II or XVI of the SSA, that the qualified
beneficiary is no longer disabled; or
(ii) The date on which the qualified beneficiary is informed,
through the furnishing of the plan's summary plan description or the
notice described in Sec. 2590.606-1, of both the responsibility to
provide the notice and the plan's procedures for providing such notice
to the administrator.
(d) Required contents of notice. (1) A plan may establish
reasonable requirements for the content of any notice described in this
section, provided that a plan may not deem a notice to have been
provided untimely if such notice, although not containing all of the
information required by the plan, is provided within the time limit
established under the plan in conformity with paragraph (c) of this
section, and the administrator is able to determine from such notice
the plan, the covered employee and qualified beneficiary(ies), the
qualifying event or disability, and the date on which the qualifying
event (if any) occurred.
(2) An administrator may require a notice that does not contain all
of the information required by the plan to be supplemented with the
additional information necessary to meet the plan's reasonable content
requirements for such notice in order for the notice to be deemed to
have been provided in accordance with this section.
(e) Who may provide notice. With respect to each of the notice
requirements of this section, any individual who is either the covered
employee, a qualified beneficiary with respect to the qualifying event,
or any representative acting on behalf of the covered employee or
qualified beneficiary may provide the notice, and the provision of
notice by one individual shall satisfy any responsibility to provide
notice on behalf of all related qualified beneficiaries with respect to
the qualifying event.
(f) Plan provisions. To the extent that a plan provides a covered
employee or qualified beneficiary a period of time longer than that
specified in this section to provide notice to the administrator, the
terms of the plan shall govern the time frame for such notice.
(g) Additional rights to continuation coverage. Nothing in this
section shall be construed to preclude a plan from providing, in
accordance with its terms, continuation coverage to a qualified
beneficiary although a notice requirement of this section was not
satisfied.
(h) Applicability. This section shall apply to any notice
obligation described in this section that arises on or after the first
day of the first plan year beginning on or after November 26, 2004.
Sec. 2590.606-4. Notice requirements for plan administrators.
(a) General. Pursuant to section 606(a)(4) 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, notice to each qualified beneficiary of
the qualified beneficiary's rights to continuation coverage under the
plan.
(b) Notice of right to elect continuation coverage. (1) Except as
provided in paragraph (b) (2) or (3) of this section, upon receipt of a
notice of qualifying event furnished in accordance with Sec. 2590.606-
2 or Sec. 2590.606-3, the administrator shall furnish to each
qualified beneficiary, not later than 14 days after receipt of the
notice of qualifying event, a notice meeting the requirements of
paragraph (b)(4) of this section.
(2) In the case of a plan with respect to which an employer of a
covered employee is also the administrator of the plan, except as
provided in paragraph (b)(3) of this section, if the employer is
otherwise required to furnish a notice of a qualifying event to an
administrator pursuant to Sec. 2590.606-2, the administrator shall
furnish to each qualified beneficiary a notice meeting the requirements
of
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paragraph (b)(4) of this section not later than 44 days after:
(i) In the case of a plan that provides, with respect to the
qualifying event, that continuation coverage and the applicable period
for providing notice under section 606(a)(2) of the Act shall commence
with the date of loss of coverage, the date on which a qualified
beneficiary loses coverage under the plan due to the qualifying event;
or
(ii) In all other cases, the date on which the qualifying event
occurred.
(3) In the case of a plan that is a multiemployer plan, a notice
meeting the requirements of paragraph (b)(4) of this section shall be
furnished not later than the later of:
(i) The end of the time period provided in paragraph (b)(1) of this
section; or
(ii) The end of the time period provided in the terms of the plan
for such purpose.
(4) The notice required by this paragraph (b) shall be written in a
manner calculated to be understood by the average plan participant and
shall contain the following information:
(i) The name of the plan under which continuation coverage is
available; and the name, address and telephone number of the party
responsible under the plan for the administration of continuation
coverage benefits;
(ii) Identification of the qualifying event;
(iii) Identification, by status or name, of the qualified
beneficiaries who are recognized by the plan as being entitled to elect
continuation coverage with respect to the qualifying event, and the
date on which coverage under the plan will terminate (or has
terminated) unless continuation coverage is elected;
(iv) A statement that each individual who is a qualified
beneficiary with respect to the qualifying event has an independent
right to elect continuation coverage, that a covered employee or a
qualified beneficiary who is the spouse of the covered employee (or was
the spouse of the covered employee on the day before the qualifying
event occurred) may elect continuation coverage on behalf of all other
qualified beneficiaries with respect to the qualifying event, and that
a parent or legal guardian may elect continuation coverage on behalf of
a minor child;
(v) An explanation of the plan's procedures for electing
continuation coverage, including an explanation of the time period
during which the election must be made, and the date by which the
election must be made;
(vi) An explanation of the consequences of failing to elect or
waiving continuation coverage, including an explanation that a
qualified beneficiary's decision whether to elect continuation coverage
will affect the future rights of qualified beneficiaries to portability
of group health coverage, guaranteed access to individual health
coverage, and special enrollment under part 7 of title I of the Act,
with a reference to where a qualified beneficiary may obtain additional
information about such rights; and a description of the plan's
procedures for revoking a waiver of the right to continuation coverage
before the date by which the election must be made;
(vii) A description of the continuation coverage that will be made
available under the plan, if elected, including the date on which such
coverage will commence, either by providing a description of the
coverage or by reference to the plan's summary plan description;
(viii) An explanation of the maximum period for which continuation
coverage will be available under the plan, if elected; an explanation
of the continuation coverage termination date; and an explanation of
any events that might cause continuation coverage to be terminated
earlier than the end of the maximum period;
(ix) A description of the circumstances (if any) under which the
maximum period of continuation coverage may be extended due either to
the occurrence of a second qualifying event or a determination by the
Social Security Administration, under title II or XVI of the Social
Security Act (42 U.S.C. 401 et seq. or 1381 et seq.) (SSA), that the
qualified beneficiary is disabled, and the length of any such
extension;
(x) In the case of a notice that offers continuation coverage with
a maximum duration of less than 36 months, a description of the plan's
requirements regarding the responsibility of qualified beneficiaries to
provide notice of a second qualifying event and notice of a disability
determination under the SSA, along with a description of the plan's
procedures for providing such notices, including the times within which
such notices must be provided and the consequences of failing to
provide such notices. The notice shall also explain the responsibility
of qualified beneficiaries to provide notice that a disabled qualified
beneficiary has subsequently been determined to no longer be disabled;
(xi) A description of the amount, if any, that each qualified
beneficiary will be required to pay for continuation coverage;
(xii) A description of the due dates for payments, the qualified
beneficiaries' right to pay on a monthly basis, the grace periods for
payment, the address to which payments should be sent, and the
consequences of delayed payment and non-payment;
(xiii) An explanation of the importance of keeping the
administrator informed of the current addresses of all participants or
beneficiaries under the plan who are or may become qualified
beneficiaries; and
(xiv) A statement that the notice does not fully describe
continuation coverage or other rights under the plan, and that more
complete information regarding such rights is available in the plan's
summary plan description or from the plan administrator.
(c) Notice of unavailability of continuation coverage. (1) In the
event that an administrator receives a notice furnished in accordance
with Sec. 2590.606-3 relating to a qualifying event, second qualifying
event, or determination of disability by the Social Security
Administration regarding a covered employee, qualified beneficiary, or
other individual and determines that the individual is not entitled to
continuation coverage under part 6 of title I of the Act, the
administrator shall provide to such individual an explanation as to why
the individual is not entitled to continuation coverage.
(2) The notice required by this paragraph (c) shall be written in a
manner calculated to be understood by the average plan participant and
shall be furnished by the administrator in accordance with the time
frame set out in paragraph (b) of this section that would apply if the
administrator received a notice of qualifying event and determined that
the individual was entitled to continuation coverage.
(d) Notice of termination of continuation coverage. (1) The
administrator of a plan that is providing continuation coverage to one
or more qualified beneficiaries with respect to a qualifying event
shall provide, in accordance with this paragraph (d), notice to each
such qualified beneficiary of any termination of continuation coverage
that takes effect earlier than the end of the maximum period of
continuation coverage applicable to such qualifying event.
(2) The notice required by this paragraph (d) shall be written in a
manner calculated to be understood by the average plan participant and
shall contain the following information:
(i) The reason that continuation coverage has terminated earlier
than the end of the maximum period of
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continuation coverage applicable to such qualifying event;
(ii) The date of termination of continuation coverage; and
(iii) Any rights the qualified beneficiary may have under the plan
or under applicable law to elect an alternative group or individual
coverage, such as a conversion right.
(3) The notice required by this paragraph (d) shall be furnished by
the administrator as soon as practicable following the administrator's
determination that continuation coverage shall terminate.
(e) Special notice rules. The notices required by paragraphs (b),
(c), and (d) of this section shall be furnished to each qualified
beneficiary or individual, except that:
(1) An administrator may provide notice 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
(2) An administrator may provide notice to each qualified
beneficiary who is the dependent child of a covered employee by
furnishing a single notice to the covered employee or the covered
employee's spouse, if, on the basis of the most recent information
available to the plan, the dependent child resides at the same location
as the individual to whom such notice is provided.
(f) Delivery of notice. The notices required by this section shall
be furnished in any manner consistent with the requirements of Sec.
2520.104b-1 of this chapter, including paragraph (c) of that section
relating to the use of electronic media.
(g) Model notice. The appendix to this section contains a model
notice that is intended to assist administrators in discharging the
notice obligations of paragraph (b) of this section. Use of the model
notice is not mandatory. The model notice reflects the requirements of
this section as they would apply to single-employer group health plans
and must be modified if used to provide notice with respect to other
types of group health plans, such as multiemployer plans or plans
established and maintained by employee organizations for their members.
In order to use the model notice, administrators must appropriately add
relevant information where indicated in the model notice, select among
alternative language and supplement the model notice to reflect
applicable plan provisions. Items of information that are not
applicable to a particular plan may be deleted. Use of the model
notice, appropriately modified and supplemented, will be deemed to
satisfy the notice content requirements of paragraph (b)(4) of this
section.
(h) Applicability. This section shall apply to any notice
obligation described in this section that arises on or after the first
day of the first plan year beginning on or after November 26, 2004.
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Signed at Washington, DC., this 19th day of May, 2004.
Ann L. Combs,
Assistant Secretary, Employee Benefits Security Administration,
Department of Labor.
[FR Doc. 04-11796 Filed 5-25-04; 8:45 am]
BILLING CODE 4510-29-C
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