Four Tips on Reviewing and Updating COBRA Notice Procedures

February 23, 2012 – 1:31 pm | By Gwen Cofield | Post a Comment

The failure to administer COBRA continuation coverage notices correctly can cost employers and plan administrators money, time and aggravation, says COBRA expert Paul M. Hamburger, Esq. of Proskauer Rose LLP. He provides four tips they can use to help avoid COBRA notice missteps: (1) prepare clear, accurate and complete COBRA notices; (2) be sure to use the COBRA notices created by following Tip No. 1; (3) provide notices on a timely basis; and (4) keep good records.

Tip No. 1 – Prepare Clear, Accurate and Complete COBRA Notices

At least 15 things should be in properly drafted COBRA notices, according to COBRA notice regulations issued by the U.S. Department of Labor (DOL). To help administrators figure out how to convey the information, DOL prepared model COBRA notices and made them available on its website. However, plan administrators must still review those model notices carefully and have them completed in light of actual plan design and administrative rules. Another reason to review notices carefully is that certain types of plan designs, like retiree health benefits or health flexible spending accounts need special notices because of the unique COBRA rights that apply. Also, if you use third-party administrators to assist in COBRA administration, be sure to review the notices used for accuracy and consistency with existing group health plan designs.

Tip No. 2 – Be Sure to Use the COBRA Notices Created By Following Tip No. 1

Once a plan administrator has prepared a good set of clear and accurate COBRA notices, the next rule is — use them! It is clear from the reported cases that administrators are not always using accurate and detailed COBRA notices. There are reported cases where COBRA notices were provided on postcards. Another instance where properly completed notices are not used is when COBRA coverage is offered through an exit interview, which has several problems, including the increased potential for misunderstandings and the possibility of omitting notices to other related qualified beneficiaries.

Tip No. 3 – Provide Notices on a Timely Basis

The key to providing timely COBRA notices is to have a compliance system in place that recognizes the importance of providing COBRA notices: (1) at the time of initial coverage; (2) when COBRA qualifying events occur; and (3) on any other occasions required by COBRA regulations (such as at early termination of coverage or when coverage is not available).

Tip No. 4 — Keep Good Records

In COBRA litigation, there is a “rule” of law known as the “Mailbox Rule.” This rule is a legal presumption — if a plan administrator can prove that a COBRA notice was sent by first class mail to the last known address of the qualified beneficiary, the law presumes that it reached its intended recipient. There is no legal requirement that the administrator prove that a qualified beneficiary actually receives a COBRA notice; rather the requirement is to prove that the notices were sent and that the correct address was used. This means it is important to have a system in place that will track the actual production and delivery of notices to qualified beneficiaries.

Hamburger explains these tips in more detail in Mandated Health Benefits: The COBRA Guide.

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