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COBRA Notice and Disclosure Rules
Earlier this year, the US Department of Labor (DOL) published proposed regulations updating the notice and disclosure requirements applicable to health care continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). These proposed regulations update model notices, give disclosure guidance, and establish two new required COBRA notices. The proposed regulations were originally effective for plan years beginning on or after January 1, 2004. However, in September, the DOL announced a delayed effective date in order to allow employers and plan administrators time to comply with the new requirements. The effective date is now 6 months after the DOL's adoption of the final rules to implement the administrative changes required by the new rules. The DOL expects to issue final rules in early 2004.
Background
COBRA was enacted to afford employer-sponsored group health care coverage to employees and their covered spouses and dependents upon specific events that would otherwise lead to a loss of group health care coverage. COBRA applies to employer-sponsored group health plans maintained by employers that employ more than 20 employees. Upon the occurrence of specific events causing a loss of health care coverage, plan participants and their covered spouses and dependants (“qualified individuals”) must be offered continuation coverage of their group health plan benefits for a period of 18, 29 or 36 months, depending upon the type of event that gives rise to the COBRA coverage. Qualified individuals may be required to pay for the cost of such coverage, up to a maximum of 102% of the actual cost (or up to 150% in the event of certain disability coverage).
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