Should We Provide a COBRA Notice of Unavailability to an Individual Who Is Not Covered Under Our Plan?
QUESTION: We received notice from an employee that his son turned age 26 and is no longer an eligible dependent under our company’s group health plan. According to our insurer, however, the son is not covered under the plan because his coverage was previously dropped during open enrollment. Do we still need to send a notice of unavailability informing the employee’s son that he is not entitled to elect COBRA?
ANSWER: Yes. The DOL’s COBRA regulations require a plan administrator to provide a notice of unavailability to certain individuals who may expect to receive COBRA coverage (or an extension of COBRA coverage). The notice is required for any covered employee, qualified beneficiary, or “other individual” for whom the administrator has received any of the following notices and has determined that COBRA coverage (or an extension of COBRA coverage) is not available: (1) notice that a qualifying event has occurred; (2) notice that a second qualifying event has occurred; or (3) notice that a qualified beneficiary has been determined by the Social Security Administration to be disabled.
Even though the employee’s son is no longer covered under your plan, the notice from your employee that his son has ceased to be a dependent under the plan is a notice of a qualifying event. Furthermore, even though your employee’s son is not a COBRA qualified beneficiary (because he was not covered by the plan when he lost eligibility), he is still an “other individual” to whom you must provide a notice of unavailability.
The notice must be written in a manner calculated to be understood by the average plan participant and must explain why the individual is not entitled to COBRA (or an extension of COBRA). It must be furnished by the deadline that would otherwise apply for providing a COBRA election notice—generally 14 days after the plan administrator receives notice of a qualifying event, second qualifying event, or disability. The individual entitled to receive a notice of unavailability is the person who was expecting to receive COBRA (or an extension of COBRA). This will not necessarily be the person who provided notice to the plan administrator. In this case, your employee’s son should receive the notice. Like other COBRA-required notices, a notice of unavailability must be furnished using measures reasonably calculated to ensure actual receipt of the material. While DOL-approved methods include mail, hand-delivery, and electronic transmission, we recommend using first-class mail. For more information, see EBIA’s COBRA manual at Section XVIII.M (“Notice of Unavailability of COBRA Coverage”).
Contributing Editors: EBIA Staff.
