The U.S. Department of Labor (“DOL”) issued final rules on May 25 affecting various notice obligations related to COBRA coverage available under group health plans. Applicable to plan administrators, employers with group health plans, and beneficiaries under those plans, the new rules are effective the first day of the plan year for a group health plan that begins after November 25, 2004.

New Rules for Employers

COBRA requires employers with 20 or more employees to offer their employees (and in some cases their beneficiaries) the option to continue group health plan coverage, at their own expense, in certain circumstances when they would otherwise lose their coverage.

Currently, the COBRA law requires employers to notify the group health plan administrator of a “qualifying event” – the employee’s death, termination from employment, or eligibility for Medicare – within 30 days of the date of the qualifying event. The new rule is similar, but more specific, as follows:

• The content of the notice to the plan administrator must include “sufficient information to enable the administrator to determine the plan, the covered employee, the qualifying event, and the date of the qualifying event.”

• If a group health plan contains specific provisions that continuation coverage and the notice period commence on the date of loss of coverage (as opposed to the date of the qualifying event, which may be different), the employer must provide notice to the plan administrator of the qualifying event within 30 days after the date of loss of coverage because of that qualifying event. In all other cases, the employer must provide notice to the administrator within 30 days of the qualifying event.

• The notice period for multi-employer group health plans is no later than whatever the terms of the plan provide for such notice. Limited and special exemptions from notice are available for such plans that give the plan administrator discretion to determine whether a qualifying event has occurred.

Rules for Plan Administrators and Beneficiaries

Employees and qualified beneficiaries must provide the plan administrator with notice of divorce or legal separation, a child’s loss of dependent status, the occurrence of a second qualifying event during an initial COBRA coverage period, and Social Security Administration disability determinations. Notice of these events generally must be provided within 60 days (or, for certain Social Security disability determinations, within 30 days) of the latest of the following: (1) the event itself; (2) the date coverage would be lost because of the event; or (3) the date the employee/beneficiary was informed of the plan’s procedures for providing notice of these events.

Plan administrators must develop “reasonable procedures” for employees/beneficiaries to provide the various types of notice described above. In addition, new rules govern the content and timing of the notices required: (1) when an employee becomes covered under the group health plan; and (2) when an employee/beneficiary is required to make an election decision following a qualifying event. Other detailed provisions in the new rules for plan administrators are beyond the scope of this Alert.

Model Notices Available

Model notices, developed by the DOL, can be seen by clicking the links at the top of this Alert.

In the 6 months before these new rules go into effect, employers are encouraged to consult with their group health plan administrators to coordinate efforts to meet new requirements. Employers are also encouraged to consult with their labor and employment counsel to audit compliance with the new rules.

If you have further questions about this alert or COBRA requirements in general, you may contact our Labor and Employment Group; Adam S. Forman at (313) 496-654, email: forman@millercanfield.com; or James B. Thelen at (517) 483-4901, email: thelen@millercanfield.com . This message is for general information only and should not be used as a basis for specific action without obtaining further legal advice.