COBRA Recordkeeping Compliance Checklist
The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires group health plans to offer continuation coverage to covered employees and other eligible participants. COBRA provisions give certain former employees, retirees, spouses former spouses, and dependent children the right to temporary continuation of health coverage at group rates when coverage is lost in specific events. COBRA coverage premiums are usually paid by COBRA participants and is more expensive than coverage they had while employed but less expensive than individual health coverage.
Would your company pass the TAMRA portion of an IRS audit? To meet the COBRA compliance requirements under TAMRA (Technical and Miscellaneous Revenue Act), you must have:
- proof of COBRA training
- written COBRA procedures (generally in a manual with instructions)
- documentation of program design when first subject to COBRA with program updates through the present date
- documentation of program monitoring by a qualified, independent third party
COBRA Notice Requirements
COBRA requires employers to notify participants of their rights and options regarding continuation coverage and keep records of all notices.
Four notices employers are required to provide to qualifying beneficiaries:
- General Notice/Initial Notice
The general notice required describes general COBRA rights and employee obligations and must be sent to each covered employee and each covered spouse of an employee who becomes covered under the plan within the first 90 days of coverage under the group health plan.
The general notice must include specific information and can include language from the plan’s Summary Plan Description.
The general notice must be sent to the covered employee and the covered employee’s spouse, whether they are at the same address or different addresses.
- Election Notice
The election notice describes the rights to continuation coverage and explains how to make an election.
It must be provided to the qualified beneficiaries within 14 days after the plan administrator receives the notice of a qualifying event. It must be sent to each qualified beneficiary (including the covered employee, covered spouse, and any covered dependent child) when plan coverage is lost in connection with the qualifying event.
The election notice should include the name of the plan and the contact information for the plan’s administrator, the qualifying event, qualified beneficiaries, and explanation of COBRA rights to elect continuation coverage and how to elect coverage, premium payment requirements, what will happen if coverage isn’t elected, and how long coverage is available.
- Unavailability of Continuation of Coverage Notice
If individuals are not entitled to continuation of coverage, the plan must send them a notice of unavailability of continuation of coverage within 14 days of receiving the request to continue coverage. It must include an explanation of the reason for denying the request.
- Termination of Coverage Notice
If coverage is terminated early, before the end of an 18-, 29- or 36-month period, employers are required to provide a termination of coverage notice. The notice must explain the reason for termination and rights the qualified beneficiary may have under the plan or under the law to elect alternate coverage such as converting to an individual policy.
Is your company providing these COBRA notices? It’s very important for employers to provide COBRA notices to comply with COBRA regulations, as well as document the method and timing of notice delivery to the last known address.