Reopening Your Workplace Series, Issue 4 – Donnelly + Gross
As the Covid19 outbreak prompts layoffs, employers with at least 20 employees on more than 50 percent of their typical business days in the previous calendar year should review their COBRA notifications. The Consolidated Omnibus Budget Reconciliation Act (COBRA), requires group health plans to offer continuation coverage to covered employees, former employees, spouses, former spouses, and dependent children when group health coverage would otherwise be lost due to certain events, including a covered employee’s job loss or reduction in hours for reasons other than gross misconduct.
New Model Notices
When an employee’s coverage is lost due to termination or a reduction in hours occurs, the employer must notify the plan within 30 days after the event occurs. The plan must provide the qualified beneficiaries with an election notice within 14 days. The election notice describes the employee’s rights to continuation coverage and how to make an election. The Department of Labor (DOL) has historically maintained a Model Notice for the election notice.
This month, the DOL has published updated Model Notices, which can be found at www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/laws/cobra/model-election-notice.docx. The DOL also issued updated FAQs for the Model Notices, seewww.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/cobra-model-notices.pdf.
Election Notice Compliance
The DOL considers using the Model Notice and completing it to be good faith compliance with the COBRA election notice content requirements. Reviewing and updating COBRA notices now will ward off potential litigation. Large businesses have endured class actions under COBRA when their plans have deviated from the Model Notice. COBRA election notices must be written in a manner calculated to be understood by the average plan participant and shall contain numerous requirements, including but not limited to:
- The name of the plan under which continuation coverage is available;
- Identification of the qualifying event;
- Identification of the qualified beneficiaries who are recognized by the plan as being entitled to elect continuation coverage;
- A statement that each individual who is a qualified beneficiary with respect to the qualifying event has an independent right to elect continuation coverage;
- An explanation of the plan’s procedures for electing continuation coverage;
- An explanation of the consequences of failing to elect or waiving continuation coverage;
- A description of the continuation coverage made available under the plan;
- An explanation of the maximum period for which continuation;
- A description of the circumstances (if any) under which the maximum period of continuation coverage may be extended due to a second qualifying event or a determination by the Social Security Administration;
- A description of the responsibility of qualified beneficiaries to provide notice of a second qualifying event and notice of a disability determination under the SSA if the maximum duration is less than 36 months;
- A description of the amount, if any, that each qualified beneficiary will be required to pay for continuation coverage;
- 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;
- 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
- 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.
For further information on COBRA, see www.dol.gov/agencies/ebsa/laws-and-regulations/laws/cobra.
We continue to closely monitor the situation and update this information to provide the latest workplace and legal developments related to Covid19. For answers to your specific questions and for the newest developments, please visit our website at www.donnellygross.com/covid-19-resources/ and contact us at Donnelly + Gross at 352-374-4001 or directly by email:
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- This publication is for general information only and intended for clients and friends of Donnelly + Gross. It should not be relied upon as legal advice as the law related to each situation varies. Moreover, workplace law related to COVID-19 is dynamic and changing daily. The sharing of this information does not establish a client relationship.