Section 6 Mandatory Notices

• Library: Employer-Employee Law 2008

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), 29 U.S.C. §§ 1161–1168, requires that notice of statutory rights be given upon commencement of coverage and upon the occurrence of qualifying events. All notices “shall be written in a manner calculated to be understood by the average plan participant.” 29 C.F.R. §§ 2590.606-1(c) and 2590.606-4(b)(4). “Providing appropriate notice is a key requirement under COBRA.” Lincoln Gen. Hosp. v. Blue Cross/Blue Shield of Neb., 963 F.2d 1136, 1139 (8^th Cir. 1992). Generally, the notice requirement is satisfied by inclusion of notice in the Summary Plan Description (SPD) that is distributed by the employer to employees. An SPD is required under the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001–1461, for both pension and welfare plans, such as a group health plan. The SPD must be accurate, comprehensive, and understandable to the average participant and must use a table of contents, nontechnical language, and examples. 29 C.F.R. § 2520.102-2.

First, written notice must be given at commencement of coverage to the employee and the employee’s spouse, if any. 29 U.S.C. § 1166(a)(1); see Delcastillo v. Odyssey Res. Mgmt., Inc., 431 F.3d 1124, 1129–30 (8^th Cir. 2005) (discussing notice requirements at the creation of a new plan and substitution of policyholder). Timely notice is within “90 days after the date on which such individual’s coverage under the plan commences.” 29 C.F.R. § 2590.606-1(b)(1)(i).

The U.S. Department of Labor construes proper “commencement of coverage” notice as containing the following information:

• The name of the plan and the name, address, and telephone number of a party from whom additional information may be obtained

• A general description of continuation of coverage under the plan, including identification of classes of individuals who may become eligible for coverage and the types of qualifying events giving rise to coverage

• When and under what circumstances the right to continuation of coverage arises

• The obligation of the beneficiary to notify the plan administrator of the occurrence of qualifying events

• The maximum period of continuation of coverage and circumstances that may extend that period

• The plan’s requirements for the payment of premiums for continuation of coverage

• An explanation of the plan’s requirements and procedures regarding notification of divorce, legal separation, or a child ceasing to be a dependent

• An explanation of the plan’s procedures and...