UPDATE ON PRIOR ARTICLES

 

COBRA FINAL REGULATIONS

RETIRE HEALTH AND AGE DISCRIMINATION

QJSA RELATIVE VALUE REGULATIONS

 

Prepared by: Debra L. Mackey, Esq.

Burr & Forman LLP

Birmingham, AL

 

 

Guidance issued after the following articles were posted on the SEBC website necessitate that the articles be updated.

 

I.       COBRA Notice Regulations (discussed at and posted after 2003 AEC)

 

The initial article covered the proposed COBRA notice regulations. Final regulations were issued by the Department of Labor in May, 2004. The DOL modified and clarified several of the proposed regulations, and both of the “model notices” attached to last year’s article have been revised. The changes are discussed below, and the new model notices are attached at the end of this article. Keep in mind that while a plan is not required to use the model notices, the appropriate use of them is considered by the DOL as compliance with the notice regulations. The final regulations apply to notice obligations arising on and after the first day of the first plan year beginning on and after November 26, 2004.

 

Changes made to the initial written notice the group health plan is required to provide at the commencement of coverage, disclosing basic information about COBRA, include:

 

a.       A new paragraph clarifying that providing notice within the time frame set forth in the regulation is deemed to have been provided at the time of “commencement of coverage” under the plan.

 

         b.       A new paragraph providing that, when an individual is required to be furnished with a COBRA election notice within the 90 day period for furnishing the initial notice, the initial notice obligation is satisfied by furnishing an election notice in accordance with the regulatory provisions on election notices.

 

         c.       Modifying the notice to allow placement of plan-specific identification information at the end of the notice.

 

         d.       Modifying the notice to eliminate the identification of both the plan administrator and the COBRA administrator. Now, only the identifying information of party or parties who will provide information about the plan and COBRA upon request is required to be disclosed.

 

         e.       Eliminating the requirement that the notice describe how qualified beneficiaries must provide notice of a second qualifying event, because this information is required to be included in the SPD and in the election notice.

 

         f.       References to the COBRA coverage beginning dates have been eliminated.

 

         g.       Clarifying that there is no requirement to furnish an initial notice to dependent children, even if the notice obligation is triggered early by the occurrence of a qualifying event involving a dependent child.

 

No changes were made to the regulations regarding the employer’s notice to the administrator of the qualifying event.

 

Changes made to the regulations regarding notice by a qualified beneficiary to the administrator of a qualifying event include:

 

         a.       Eliminating “any officer of the employer” from the persons to whom notice may be given. Therefore, notice must be given to a party who customarily handles employee benefit matters.

 

         b.       Restructuring the regulation to conform with Treasury Regulations by providing that the sixty-day period begins to run from the latest of (1) the date of the qualifying event, (2) the date on which there is a loss of coverage, or (3) the date on which the qualified beneficiary is informed through the plan’s SPD or the initial COBRA notice of his or her obligation to provide notice and the procedures related thereto.

 

         c.       Clarifying that an individual who previously received an SSA disability determination who has not received a subsequent determination that he or she is no longer disabled has at least sixty days after the occurrence of a qualifying event to notify the administrator of his or her disability, in order to be entitled to the disability extension.

 

Changes made to the plan administrator’s obligation to provide notice after a qualifying event include:

 

         a.       Clarifying that the 44 day period for the administrator to provide notice applies only in those cases where the employer is also the administrator and is required to provide notice of a qualifying event to the administrator.

 

         b.       Clarifying that a plan may adopt a different starting date for COBRA coverage for different types of qualifying events.

 

         c.       Eliminating the requirement that information concerning alternative coverage and conversion rights be included in the COBRA election notice.

 

         d.       Clarifying that qualified beneficiaries may be identified either by name or by reference to their status (e.g. employee, spouse, dependent child covered under the plan prior to the qualifying event).

 

         e.       The optional Trade Act paragraph clarifies that the Trade Act language applies to both PBGC-eligibles and TAA-eligibles.

 

         f.       Clarifying that when the administrator receives an election that does not qualify, the administrator must notify the “elector” that COBRA is not available, regardless of the reason for the denial of coverage.

 

II.      Coordination of Retiree Health Benefits with Medicare (posted May 2004)

 

The original article discussed the EEOC’s approval of regulations permitting coordination of retiree health benefits with Medicare, without violating the Age Discrimination in Employment Act (“ADEA”). Under the regulation, an employer would not violate the ADEA if it reduces or eliminates retiree health benefits when the retiree becomes eligible for Medicare. Because of political pressure, apparently largely from the AARP, the future of the regulation is in jeopardy. Both employer groups and organized labor supported the regulation out of concern that the ADEA may actually create an incentive for employers to eliminate or reduce retiree health benefits altogether. In August of 2001, the EEOC revoked its long-held position that benefit plans that either eliminate or reduce benefits when a retiree becomes eligible for Medicare violate the ADEA. At that time, the EEOC announced that it would no longer litigate cases involving this issue while the issue was under review. While the regulation may continue to move through the inter-agency review process, EEOC expects that OMB will not take any action on them, at least until after the presidential election. The regulations had been expected to be released in September of 2004.

 

The last public statement on the issue by the EEOC is a May 17, 2004 press release describing that in testimony before Congress, the EEOC stated that its prior position, rather than protecting health benefits for retirees, actually threatens to have the opposite effect by encouraging employers to curtail or eliminate retiree health benefits.

 

III.     Disclosure of Relative Values of Optional Forms of Benefit (posted June 2004)

 

In Announcement 2004-58, the IRS announced that, in certain circumstances, the effective date of the regulations on QJSA explanations relating to optional forms of benefit have been delayed. Generally, the regulations are effective for QJSA explanations provided with respect to annuity starting dates beginning on or after February 1, 2006. Notwithstanding this extension, the October 1, 2004 effective date is retained for explanations with respect to any optional form of benefit that is subject to Code § 417(e)(3) (e.g. single sum distributions, partial single sum distribution combined with an annuity, and installment payments) if the actuarial present value of that optional form of benefit is less than the actuarial present value (as determined under Code § 417(e)(3)) of the QJSA. For example, if a single sum distribution is less valuable than the QJSA, the October 1, 2004 date remains in effect.

 

In addition to delaying the effective date, the IRS clarified that under the generalized notice method of disclosure, reasonable estimates may be used to determine the amount of the normal form of benefit available to a participant. Furthermore, the additional information that must be provided in the general notice may be based in part on participant-specific data as long as the notice requirements are otherwise satisfied.

 

Regulations will also be issued, effective retroactively, clarifying the interaction between the QJSA requirements and the Code § 417(e)(3) mandatory use of specified actuarial assumptions to address the concern that, solely as a result of the use of the mandatory actuarial assumptions, the value of a single sum distribution may exceed the value of the QJSA, which is impermissible under current regulations. The regulations are expected to provide that a plan will not fail to satisfy Code § 417 merely because the use of the mandatory actuarial assumptions cause an optional form to be more valuable than the QJSA.

APPENDIX TO § 2590.606-1

MODEL GENERAL NOTICE OF COBRA CONTINUATION COVERAGE RIGHTS

(For use by single-employer group health plans)

 

** CONTINUATION COVERAGE RIGHTS UNDER COBRA **

 

Introduction

 

You are receiving this notice because you have recently become covered under a group health plan (the Plan). This notice contains important information about your right to COBRA continuation coverage, which is a temporary extension of coverage under the Plan. This notice generally explains COBRA continuation coverage, when it may become available to you and your family, and what you need to do to protect the right to receive it.

 

The right to COBRA continuation coverage was created by a federal law, the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). COBRA continuation coverage can become available to you when you would otherwise lose your group health coverage. It can also become available to other members of your family who are covered under the Plan when they would otherwise lose their group health coverage. For additional information about your rights and obligations under the Plan and under federal law, you should either review the Plan’s Summary Plan Description or contact the Plan Administrator.

 

What is COBRA Continuation Coverage?

 

COBRA continuation coverage is a continuation of Plan coverage when coverage would otherwise end because of a life event known as a “qualifying event.” Specific qualifying events are listed later in this notice. After a qualifying event, COBRA continuation coverage must be offered to each person who is a “qualified beneficiary.” You, your spouse, and your dependent children could become qualified beneficiaries if coverage under the Plan is lost because of the qualifying event. Under the Plan, qualified beneficiaries who elect COBRA continuation coverage [choose and enter appropriate information: must pay or are not required to pay] for COBRA continuation coverage.

 

If you are an employee, you will become a qualified beneficiary if you will lose your coverage under the Plan because either one of the following qualifying events happens:

 

·     Your hours of employment are reduced, or

 

·     Your employment ends for any reason other than your gross misconduct.

 

If you are the spouse of an employee, you will become a qualified beneficiary if you will lose your coverage under the Plan because any of the following qualifying events happens:

 

·     Your spouse dies;

 

·     Your spouse’s hours of employment are reduced;

 

·     Your spouse’s employment ends for any reason other than his or her gross misconduct;

 

·     Your spouse becomes entitled to Medicare benefits (under Part A, Part B, or both); or

 

·     You become divorced or legally separated from your spouse.

 

Your dependent children will become qualified beneficiaries if they will lose coverage under the Plan because any of the following qualifying events happens:

 

·     The parent-employee dies;

 

·     The parent-employee’s hours of employment are reduced;

 

·     The parent-employee’s employment ends for any reason other than his or her gross misconduct;

 

·     The parent-employee becomes entitled to Medicare benefits (under Part A, Part B, or both);

 

·     The parents become divorced or legally separated; or

 

·     The child stops being eligible for coverage under the plan as a “dependent child.”

 

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[If the Plan provides retiree health coverage, add the following paragraph:]

 

Sometimes, filing a proceeding in bankruptcy under title 11 of the United States Code can be a qualifying event. If a proceeding in bankruptcy is filed with respect to [enter name of employer sponsoring the plan], and that bankruptcy results in the loss of coverage of any retired employee covered under the Plan, the retired employee will become a qualified beneficiary with respect to the bankruptcy. The retired employee’s spouse, surviving spouse, and dependent children will also become qualified beneficiaries if bankruptcy results in the loss of their coverage under the Plan.

 

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When is COBRA Coverage Available?

 

The Plan will offer COBRA continuation coverage to qualified beneficiaries only after the Plan Administrator has been notified that a qualifying event has occurred. When the qualifying event is the end of employment or reduction of hours of employment, death of the employee, [add if Plan provides retiree health coverage: commencement of a proceeding in bankruptcy with respect to the employer,] or the employee’s becoming entitled to Medicare benefits (under Part A, Part B, or both), the employer must notify the Plan Administrator of the qualifying event.

 

You Must Give Notice of Some Qualifying Events

 

For the other qualifying events (divorce or legal separation of the employee and spouse or a dependent child’s losing eligibility for coverage as a dependent child), you must notify the Plan Administrator within 60 days [or enter longer period permitted under the terms of the Plan] after the qualifying event occurs. You must send this notice to: [Enter name of appropriate party]. [Add description of any additional Plan procedures for this notice, including a description of any required information or documentation.]

 

How is COBRA Coverage Provided?

 

Once the Plan Administrator receives notice that a qualifying event has occurred, COBRA continuation coverage will be offered to each of the qualified beneficiaries. Each qualified beneficiary will have an independent right to elect COBRA continuation coverage. Covered employees may elect COBRA continuation coverage on behalf of their spouses, and parents may elect COBRA continuation coverage on behalf of their children.

 

COBRA continuation coverage is a temporary continuation of coverage. When the qualifying event is the death of the employee, the employee’s becoming entitled to Medicare benefits (under Part A, Part B, or both), your divorce or legal separation, or a dependent child’s losing eligibility as a dependent child, COBRA continuation coverage lasts for up to a total of 36 months. When the qualifying event is the end of employment or reduction of the employee’s hours of employment, and the employee became entitled to Medicare benefits less than 18 months before the qualifying event, COBRA continuation coverage for qualified beneficiaries other than the employee lasts until 36 months after the date of Medicare entitlement. For example, if a covered employee becomes entitled to Medicare 8 months before the date on which his employment terminates, COBRA continuation coverage for his spouse and children can last up to 36 months after the date of Medicare entitlement, which is equal to 28 months after the date of the qualifying event (36 months minus 8 months). Otherwise, when the qualifying event is the end of employment or reduction of the employee’s hours of employment, COBRA continuation coverage generally lasts for only up to a total of 18 months. There are two ways in which this 18-month period of COBRA continuation coverage can be extended.

 

Disability extension of 18-month period of continuation coverage

 

If you or anyone in your family covered under the Plan is determined by the Social Security Administration to be disabled and you notify the Plan Administrator in a timely fashion, you and your entire family may be entitled to receive up to an additional 11 months of COBRA continuation coverage, for a total maximum of 29 months. The disability would have to have started at some time before the 60th day of COBRA continuation coverage and must last at least until the end of the 18-month period of continuation coverage. [Add description of any additional Plan procedures for this notice, including a description of any required information or documentation, the name of the appropriate party to whom notice must be sent, and the time period for giving notice.]

 

Second Qualifying event extension of 18-month period of continuation coverage

 

If your family experiences another qualifying event while receiving 18 months of COBRA continuation coverage, the spouse and dependent children in your family can get up to 18 additional months of COBRA continuation coverage, for a maximum of 36 months, if notice of the second qualifying event is properly given to the Plan. This extension may be available to the spouse and any dependent children receiving continuation coverage if the employee or former employee dies, becomes entitled to Medicare benefits (under Part A, Part B, or both), or gets divorced or legally separated, or if the dependent child stops being eligible under the Plan as a dependent child, but only if the event would have caused the spouse or dependent child to lose coverage under the Plan had the first qualifying event not occurred.

 

If You Have Questions

 

Questions concerning your Plan or your COBRA continuation coverage rights should be addressed to the contact or contacts identified below. For more information about your rights under ERISA, including COBRA, the Health Insurance Portability and Accountability Act (HIPAA), and other laws affecting group health plans, contact the nearest Regional or District Office of the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) in your area or visit the EBSA website at www.dol.gov/ebsa. (Addresses and phone numbers of Regional and District EBSA Offices are available through EBSA’s website.)

 

Keep Your Plan Informed of Address Changes

 

In order to protect your family’s rights, you should keep the Plan Administrator informed of any changes in the addresses of family members. You should also keep a copy, for your records, of any notices you send to the Plan Administrator.

 

Plan Contact Information

 

[Enter name of group health plan and name (or position), address and phone number of party or parties from whom information about the plan and COBRA continuation coverage can be obtained on request.]

APPENDIX TO § 2590.606-4

MODEL COBRA CONTINUATION COVERAGE ELECTION NOTICE

(For use by single-employer group health plans)

 

[Enter date of notice]

 

Dear [Identify the qualified beneficiary(ies), by name or status]:

 

This notice contains important information about your right to continue your health care coverage in the [enter name of group health plan] (the Plan). Please read the information contained in this notice very carefully.

 

To elect COBRA continuation coverage, follow the instructions on the next page to complete the enclosed Election Form and submit it to us.

 

If you do not elect COBRA continuation coverage, your coverage under the Plan will end on [enter date] due to [check appropriate box]:

 

               End of employment                 Reduction in hours of employment

               Death of employee                  Divorce or legal separation

               Entitlement to Medicare           Loss of dependent child status

 

Each person (“qualified beneficiary”) in the category(ies) checked below is entitled to elect COBRA continuation coverage, which will continue group health care coverage under the Plan for up to ___ months [enter 18 or 36, as appropriate and check appropriate box or boxes; names may be added]:

 

               Employee or former employee

               Spouse or former spouse

      Dependent child(ren) covered under the Plan on the day before the event that caused the loss of coverage

      Child who is losing coverage under the Plan because he or she is no longer a dependent under the Plan

 

If elected, COBRA continuation coverage will begin on [enter date] and can last until [enter date]. [Add, if appropriate: You may elect any of the following options for COBRA continuation coverage: [list available coverage options].

 

COBRA continuation coverage will cost: [enter amount each qualified beneficiary will be required to pay for each option per month of coverage and any other permitted coverage periods.] You do not have to send any payment with the Election Form. Important additional information about payment for COBRA continuation coverage is included in the pages following the Election Form.

 

If you have any questions about this notice or your rights to COBRA continuation coverage, you should contact [enter name of party responsible for COBRA administration for the Plan, with telephone number and address].

COBRA CONTINUATION COVERAGE ELECTION FORM

 

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INSTRUCTIONS: To elect COBRA continuation coverage, complete this Election Form and return it to us. Under federal law, you must have 60 days after the date of this notice to decide whether you want to elect COBRA continuation coverage under the Plan.

 

Send completed Election Form to: [Enter Name and Address]

 

This Election Form must be completed and returned by mail [or describe other means of submission and due date.] If mailed, it must be post-marked no later than [enter date].

 

If you do not submit a completed Election Form by the due date shown above, you will lose your right to elect COBRA continuation coverage. If you reject COBRA continuation coverage before the due date, you may change your mind as long as you furnish a completed Election Form before the due date. However, if you change your mind after first rejecting COBRA continuation coverage, your COBRA continuation coverage will begin on the date you furnish the completed Election Form.

 

Read the important information about your rights included in the pages after the Election Form.

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I (We) elect COBRA continuation coverage in the [enter name of plan] (the Plan) as indicated below:

 

Name  Date of Birth       Relationship to Employee   SSN (or other identifier)

 

a. _____________________________________________________________________

         [Add if appropriate: Coverage option elected: ___________________________]

 

b. _____________________________________________________________________

         [Add if appropriate: Coverage option elected: ___________________________]

 

c. _____________________________________________________________________

         [Add if appropriate: Coverage option elected: ___________________________]

 

_________________________________         ____________________________________

Signature                                                   Date

 

_________________________________         ____________________________________

Print Name                                        Relationship to individual(s) listed above

 

_________________________________

_________________________________

_________________________________         ____________________________________

Print Address                                     Telephone number

IMPORTANT INFORMATION

ABOUT YOUR COBRA CONTINUATION COVERAGE RIGHTS

 

What is continuation coverage?

 

Federal law requires that most group health plans (including this Plan) give employees and their families the opportunity to continue their health care coverage when there is a “qualifying event” that would result in a loss of coverage under an employer’s plan. Depending on the type of qualifying event, “qualified beneficiaries” can include the employee (or retired employee) covered under the group health plan, the covered employee’s spouse, and the dependent children of the covered employee.

 

Continuation coverage is the same coverage that the Plan gives to other participants or beneficiaries under the Plan who are not receiving continuation coverage. Each qualified beneficiary who elects continuation coverage will have the same rights under the Plan as other participants or beneficiaries covered under the Plan, including [add if applicable: open enrollment and] special enrollment rights.

 

How long will continuation coverage last?

 

In the case of a loss of coverage due to end of employment or reduction in hours of employment, coverage generally may be continued only for up to a total of 18 months. In the case of losses of coverage due to an employee’s death, divorce or legal separation, the employee’s becoming entitled to Medicare benefits or a dependent child ceasing to be a dependent under the terms of the plan, coverage may be continued for up to a total of 36 months. When the qualifying event is the end of employment or reduction of the employee’s hours of employment, and the employee became entitled to Medicare benefits less than 18 months before the qualifying event, COBRA continuation coverage for qualified beneficiaries other than the employee lasts until 36 months after the date of Medicare entitlement. This notice shows the maximum period of continuation coverage available to the qualified beneficiaries.

 

Continuation coverage will be terminated before the end of the maximum period if:

 

·     any required premium is not paid in full on time,

 

·     a qualified beneficiary becomes covered, after electing continuation coverage, under another group health plan that does not impose any pre-existing condition exclusion for a pre-existing condition of the qualified beneficiary,

 

·     a qualified beneficiary becomes entitled to Medicare benefits (under Part A, Part B, or both) after electing continuation coverage, or

 

·     the employer ceases to provide any group health plan for its employees.

 

Continuation coverage may also be terminated for any reason the Plan would terminate coverage of a participant or beneficiary not receiving continuation coverage (such as fraud).

 

[If the maximum period shown on page 1 of this notice is less than 36 months, add the following three paragraphs:]

 

How can you extend the length of COBRA continuation coverage?

 

If you elect continuation coverage, an extension of the maximum period of coverage may be available if a qualified beneficiary is disabled or a second qualifying event occurs. You must notify [enter name of party responsible for COBRA administration] of a disability or a second qualifying event in order to extend the period of continuation coverage. Failure to provide notice of a disability or second qualifying event may affect the right to extend the period of continuation coverage.

 

Disability

 

An 11-month extension of coverage may be available if any of the qualified beneficiaries is determined by the Social Security Administration (SSA) to be disabled. The disability has to have started at some time before the 60th day of COBRA continuation coverage and must last at least until the end of the 18-month period of continuation coverage. [Describe Plan provisions for requiring notice of disability determination, including time frames and procedures.] Each qualified beneficiary who has elected continuation coverage will be entitled to the 11-month disability extension if one of them qualifies. If the qualified beneficiary is determined by SSA to no longer be disabled, you must notify the Plan of that fact within 30 days after SSA’s determination.

 

Second Qualifying Event

 

An 18-month extension of coverage will be available to spouses and dependent children who elect continuation coverage if a second qualifying event occurs during the first 18 months of continuation coverage. The maximum amount of continuation coverage available when a second qualifying event occurs is 36 months. Such second qualifying events may include the death of a covered employee, divorce or separation from the covered employee, the covered employee’s becoming entitled to Medicare benefits (under Part A, Part B, or both), or a dependent child’s ceasing to be eligible for coverage as a dependent under the Plan. These events can be a second qualifying event only if they would have caused the qualified beneficiary to lose coverage under the Plan if the first qualifying event had not occurred. You must notify the Plan within 60 days after a second qualifying event occurs if you want to extend your continuation coverage.

 

How can you elect COBRA continuation coverage?

 

To elect continuation coverage, you must complete the Election Form and furnish it according to the directions on the form. Each qualified beneficiary has a separate right to elect continuation coverage. For example, the employee’s spouse may elect continuation coverage even if the employee does not. Continuation coverage may be elected for only one, several, or for all dependent children who are qualified beneficiaries. A parent may elect to continue coverage on behalf of any dependent children. The employee or the employee’s spouse can elect continuation coverage on behalf of all of the qualified beneficiaries.

 

In considering whether to elect continuation coverage, you should take into account that a failure to continue your group health coverage will affect your future rights under federal law. First, you can lose the right to avoid having pre-existing condition exclusions applied to you by other group health plans if you have more than a 63-day gap in health coverage, and election of continuation coverage may help you not have such a gap. Second, you will lose the guaranteed right to purchase individual health insurance policies that do not impose such pre-existing condition exclusions if you do not get continuation coverage for the maximum time available to you. Finally, you should take into account that you have special enrollment rights under federal law. You have the right to request special enrollment in another group health plan for which you are otherwise eligible (such as a plan sponsored by your spouse’s employer) within 30 days after your group health coverage ends because of the qualifying event listed above. You will also have the same special enrollment right at the end of continuation coverage if you get continuation coverage for the maximum time available to you.

 

How much does continuation coverage cost?

 

Generally, each qualified beneficiary may be required to pay the entire cost of continuation coverage. The amount a qualified beneficiary may be required to pay may not exceed 102 percent (or, in the case of an extension of continuation coverage due to a disability, 150 percent) of the cost to the group health plan (including both employer and employee contributions) for coverage of a similarly situated plan participant or beneficiary who is not receiving continuation coverage. The required payment for each continuation coverage period for each option is described in this notice.

 

[If employees might be eligible for trade adjustment assistance, the following information may be added: The Trade Act of 2002 created a new tax credit for certain individuals who become eligible for trade adjustment assistance and for certain retired employees who are receiving pension payments from the Pension Benefit Guaranty Corporation (PBGC) (eligible individuals). Under the new tax provisions, eligible individuals can either take a tax credit or get advance payment of 65% of premiums paid for qualified health insurance, including continuation coverage. If you have questions about these new tax provisions, you may call the Health Coverage Tax Credit Customer Contact Center toll-free at 1-866-628-4282. TTD/TTY callers may call toll-free at 1-866-626-4282. More information about the Trade Act is also available at www.doleta.gov/tradeact/2002act_index.asp.

 

When and how must payment for COBRA continuation coverage be made?

 

First payment for continuation coverage

 

If you elect continuation coverage, you do not have to send any payment with the Election Form. However, you must make your first payment for continuation coverage not later than 45 days after the date of your election. (This is the date the Election Notice is post-marked, if mailed.) If you do not make your first payment for continuation coverage in full not later than 45 days after the date of your election, you will lose all continuation coverage rights under the Plan. You are responsible for making sure that the amount of your first payment is correct. You may contact [enter appropriate contact information, e.g., the Plan Administrator or other party responsible for COBRA administration under the Plan] to confirm the correct amount of your first payment.

 

Periodic payments for continuation coverage

 

After you make your first payment for continuation coverage, you will be required to make periodic payments for each subsequent coverage period. The amount due for each coverage period for each qualified beneficiary is shown in this notice. The periodic payments can be made on a monthly basis. Under the Plan, each of these periodic payments for continuation coverage is due on the [enter due date for each monthly payment] for that coverage period. [If Plan offers other payment schedules, enter with appropriate dates: You may instead make payments for continuation coverage for the following coverage periods, due on the following dates:]. If you make a periodic payment on or before the first day of the coverage period to which it applies, your coverage under the Plan will continue for that coverage period without any break. The Plan [select one: will or will not] send periodic notices of payments due for these coverage periods.

 

Grace periods for periodic payments

 

Although periodic payments are due on the dates shown above, you will be given a grace period of 30 days after the first day of the coverage period [or enter longer period permitted by Plan] to make each periodic payment. Your continuation coverage will be provided for each coverage period as long as payment for that coverage period is made before the end of the grace period for that payment. [If Plan suspends coverage during grace period for nonpayment, enter and modify as necessary: However, if you pay a periodic payment later than the first day of the coverage period to which it applies, but before the end of the grace period for the coverage period, your coverage under the Plan will be suspended as of the first day of the coverage period and then retroactively reinstated (going back to the first day of the coverage period) when the periodic payment is received. This means that any claim you submit for benefits while your coverage is suspended may be denied and may have to be resubmitted once your coverage is reinstated.]

 

If you fail to make a periodic payment before the end of the grace period for that coverage period, you will lose all rights to continuation coverage under the Plan.

 

Your first payment and all periodic payments for continuation coverage should be sent to:

 

[enter appropriate payment address]

 

For more information

 

This notice does not fully describe continuation coverage or other rights under the Plan. More information about continuation coverage and your rights under the Plan is available in your summary plan description or from the Plan Administrator.

 

If you have any questions concerning the information in this notice, your rights to coverage, or if you want a copy of your summary plan description, you should contact [enter name of party responsible for COBRA administration for the Plan, with telephone number and address].

 

For more information about your rights under ERISA, including COBRA, the Health Insurance Portability and Accountability Act (HIPAA), and other laws affecting group health plans, contact the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) in your area or visit the EBSA website at www.dol.gov/ebsa. (Addresses and phone numbers of Regional and District EBSA Offices are available through EBSA’s website.)

 

Keep Your Plan Informed of Address Changes

 

In order to protect your and your family’s rights, you should keep the Plan Administrator informed of any changes in your address and the addresses of family members. You should also keep a copy, for your records, of any notices you send to the Plan Administrator.

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