(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 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
[[Page 626]]
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
[[Page 627]]
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 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.
[69 FR 30097, May 26, 2004; 69 FR 34921, June 23, 2004] 
