One More Consideration at Open Enrollment Time: COBRA

While open enrollment time may feel like a whirlwind of communication, between plan design updates, changes to contribution limits and all the annual required notices, it is important not to forget obligations related to COBRA.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires group health plans to offer continuation coverage to covered employees and dependents, known as qualified beneficiaries, when coverage would otherwise be lost due to certain specific events. Qualified beneficiaries must be offered coverage that is identical to similarly situated beneficiaries who are not receiving COBRA coverage under the plan. Furthermore, beneficiaries must be allowed to make the same choices given to non-COBRA beneficiaries under the plan, including the opportunity to make changes to their COBRA elections during open enrollment such as switching between medical plans, and adding or deleting eligible dependents.

Though COBRA qualified beneficiaries are often no longer employees of the organization, they are active members of your group health plan. Therefore, any changes to the cost or structure of the plan need to be communicated to all COBRA participants, along with any annual required notices. Required notices might include:

  • HIPAA Special Enrollment Rights
  • HIPAA Privacy Notice
  • Women’s Health & Cancer Rights
  • CHIP Notice
  • Grandfathered Plan Status
  • Summary of Benefits & Coverage (SBC)
  • Revised Benefits SPDs or Summary of Material Modifications (SMM)

For active employees who choose to remove a dependent during open enrollment, there is no offer of COBRA made. However, employers must remember that the COBRA General Notice needs to be sent to any new plan participants, including employees enrolling themselves and/or a spouse onto any COBRA-qualified benefit. The same consideration should apply throughout the year when adding people for qualified events such as loss of other coverage and marriage. The COBRA General Notice, often called the “initial notice” is a description of COBRA rights under the plan and must be provided within the first 90 days of coverage. Groups can satisfy this requirement by including the general notice in the plan’s summary plan description (SPD) when delivering the SPD within this time limit. Best practice is to address the notice to “Family of [Employee]” and mail to the employee’s home address.

The Department of Labor (DOL) has developed a Model General Notice, which employers may choose to use, though not required. Use of this Model Notice, once appropriately completed, will be considered by the DOL to be good faith compliant with COBRA’s content requirements for the general notice.

If you are interested in learning more about employee benefits, please contact our Employee Benefits Management Group (EBMG) here or by calling (800) 242-4433

This Summary is provided to you for general informational purposes only, does not include references to other legal resources (e.g., supporting regulations, formal or informal opinions) unless specifically noted and should not be construed as legal advice or legal opinion on any specific facts or circumstances. Please seek qualified and appropriate counsel for further information and/or advice regarding the application of the topics discussed herein to your employee benefit plans.

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