Managing COBRA involves a lot of notices. If you don’t get these notices right, you can run into some serious compliance issues – and that can mean big fines. Not all notifications come from the employer, however. The employee, the employee’s spouse or the employee’s dependents are required to provide notice of certain qualifying events, as well as their COBRA elections. Here’s how to manage these notices.
Notification of a Qualifying Event
According to the Department of Labor, the employer is responsible for providing notice within 30 days after the following qualifying events:
- A covered employee is terminated or experiences a reduction in hours.
- A covered employee dies.
- A covered employee becomes entitled to Medicare.
- The employer experiences bankruptcy.
In some situations, however, the beneficiary is responsible for notifying the plan of a qualifying event. The employee, the employee’s spouse or the employee’s dependents must provide notice of the following events:
- Divorce or legal separation
- A child’s loss of dependent status
Although the beneficiary is responsible for providing notice in these situations, the plan is responsible for telling beneficiaries how to provide notice. The procedures must be explained in the COBRA General notice or the Summary Plan Description. Beneficiaries must be given at least 60 days from the date of the qualifying event or the loss of coverage to provide notice.
The COBRA Election Notice
Once the plan is notified of a qualifying event, it has 14 days to provide a COBRA election notice. The beneficiaries then have at least 60 days to decide whether they want to elect COBRA.
Generally, beneficiaries will make their choice by mailing the election form, but the plan may provide alternate instructions for notice. The Department of Labor provides a Model Election Notice, which can serve as a template for what the plan should send beneficiaries. For minor children, a parent or legal guardian can make the election.
Sometimes, multiple beneficiaries may qualify for COBRA at the same time. For example, an employee, the employee’s spouse and the employee’s children may all qualify. When this happens, each beneficiary has the right to make an independent election choice. That is, one beneficiary may decide to enroll even if another does not.
The plan must send a COBRA election notice to each qualifying beneficiary, even if the beneficiaries live at different addresses. The beneficiaries should keep the plan informed of any address changes, and the plan should send separate election notices to the known addresses of all qualified beneficiaries. According to CMS, notices can be delivered in person or via first class mail.
Incapacitation of a Beneficiary
If a beneficiary becomes incapacitated during the election period, the election period should be tolled – that is, paused – to provide the beneficiary with the full 60 days allowed to make an enrollment decision, or to allow time for a legal representative to be appointed to act on behalf of the beneficiary.
According to HR Daily Advisor, several courts have upheld this practice. For example, in the case of Hummer v. Sears, Roebuck & Co., the court ruled that the COBRA election period should be tolled to give a representative the remaining number of days in the original election period, but that a new election period was not required.
Revoking a Waiver
A beneficiary who waives COBRA coverage may change his or her mind and decide to enroll after all. This is permitted as long as a revocation of the waiver is submitted during the election period. However, the plan can start coverage when the revocation is received.
Of course, keeping track of all your COBRA notices and statuses can be complex, unless you have the right software. Travisoft’s T-COBRAWEB makes it easy, and we now offer Lockbox Services to make premium collection seamless as well. Request a demo to learn more.