Employers who are subject to COBRA must furnish a COBRA General (or Initial) Notice to health plan participants within 90 days from commencement of coverage. If you are not sending this notice, be certain that another party is doing so on your behalf.
- Health insurance companies and TPAs typically do NOT provide this notice to plan participants.
- A COBRA notice included in a booklet / Summary Plan Description (SPD) rarely meets COBRA’s timing and delivery requirements.
- Best practice is to address the notice to the covered employee and spouse (if applicable) and mail first class to the home.
- If you are outsourcing COBRA, be sure the administrator is sending this notice. There may be a separate fee for this service.
- If you are not outsourcing COBRA, it may be worthwhile to evaluate this low-cost option. A COBRA administrator can send required notices and facilitate enrollment and premium payments, which can be especially helpful when you have more than one health plan insurer or TPA.
- Health plans for this purpose include more than major medical. Notices must be sent for dental, vision, EAPs, health clinics, executive reimbursement medical plans, health flexible spending accounts (FSA), health reimbursement arrangements (HRA), and other plans that provide health care.
- Potential consequences for not providing the notice –
- $110/day ERISA penalty; and
- the inability to enforce the qualifying event notice deadline on plan participants (e.g., 60-day notice for a divorce) which gives an individual more time to elect COBRA. As a result, the health insurer or stop loss carrier may not cover health care expenses during the COBRA period, with the liability then falling on the employer.
Read our bulletin for more information about the notice requirement. Also, view a sample notice and cover letter in Word for your customization and use.
If you discover that the notice is not being provided, you should send it immediately. Contact an S.S. Nesbitt Benefits Producer (or Consultant) to learn more about the notice requirement or to get quotes for COBRA administration.