Sunrise, Fl. -- The U.S. Department of Labor recently issued new regulations for employers administering employee health insurance benefits under the federal COBRA legislation. Following these new regulations can help employers avoid civil penalties and potentially expensive medical liability.
Passed by Congress in 1985, the Consolidated Omnibus Budget Reconciliation Act (COBRA) provides a health insurance coverage bridge for qualified workers moving from one job to another, and coverage for their spouses and dependent children. It has been recognized as a much-needed safety net for families in crisis.
COBRA essentially applies to private-sector organizations with 20 or more employees, and it is activated by ‘qualifying events’ such as a resignation, layoff, termination or reduced hours. An employee who resigns or is let go for anything other than ‘gross misconduct’ has a guaranteed right to continue receiving coverage in the former employer’s group health plan for up to 18 months – at the employee’s expense. If the spouse and dependents were covered during the employment, their coverage also is extended.
New Rules Go into Effect January 1, 2005
The new regulations cover four aspects of COBRA administration:
•The initial COBRA notice to the employee
•The notice of a qualifying event from the employer to the plan administrator
•The responsibility of the employee or qualified beneficiaries to provide notice of a second qualifying event or disability to plan administrators, and
•The COBRA election notice provided to qualified beneficiaries
“These new regulations provide employers a good opportunity to review their current practices and make sure they are in compliance before the regulations take effect January 1,” says Ashley Kaplan, employment law attorney and head of the G.Neil legal staff. “At a minimum, you should compare your current COBRA notice with the new one in the regulations to ensure that yours contains the required information.”
Kaplan and the G.Neil legal experts urge employers to take these actions now:
•Revise your initial and qualifying event notices to comply with the new regulations
•Update your health plan COBRA procedures and Summary Plan Description (SPD) to comply with the“reasonable procedure requirement“ covering qualified beneficiaries, and
•Create new notices for unavailability of coverage and early termination of coverage