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New Model COBRA Notices Issued By DOL: Updating “Good Faith Compliance”

Posted in Plan Administration, Welfare Plans

Earlier this week, the Department of Labor issued new proposed regulations that revise the COBRA notice requirements.  Because the regulations are proposed, they are not final per se, but in the release, the DOL published new model COBRA notices.  Until the proposed regulations are finalized and effective, the DOL has stated that it will consider use of the newly revised model notices as good faith compliance with any COBRA notice content requirements (in case future changes are made).  Distribution rules have not changed.  So even before the regulations are final, plan administrators should consider immediately implementing use of these revised model notices.

Updated Model General COBRA Notice

The new general notice includes an instruction page for administrators that is not included in the actual notice sent to employees.  It is designed to help administrators complete the model notice.  Much of the notice is identical to the 2004 model notice, but includes 2 new paragraphs of text addressing the exchanges under PPACA referencing coverage options under the exchanges and special enrollment options, as well as a link to the exchange website.

Updated Model COBRA Election Notice

While similar to the 2004 notice, this new notice adds some significant new content.  It provides a statement that coverage under the other options may cost less than COBRA coverage and that it may be difficult for an individual to switch to another coverage option once a coverage decision is made.  It also includes two new pages relating the exchanges.  In comparison to the 2004 notice, this model provides substantial clarification as to the role of the exchanges in providing an alternative to COBRA, which can also be helpful for plan administrators generally in understanding how selection of an exchange option works.  In particular, pages 3, 4 and 5 can be helpful for administrators who might be asked by participants to explain how to evaluate exchange options.

Again, as these notices are being issued in conjunction with proposed rulemaking, there was no specific guidance issued regarding the use of these forms.  Depending on the commentary submitted in advance of the proposed rule, the final rule and final version of the model notices may change.  We may also get some additional guidance on how to use or modify these notices.  But as the title to this article suggests, using these forms as currently provided is the first step toward good faith compliance with the new COBRA rules.