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Employers

Employer Bulletin

State Agencies & Local Health Employers
Vol. 22, No. 10
June 21, 2005

COBRA Final Rules and Change to Employer Responsibilities; Revisions to Continuation-Conversion Notice (ET-2311)

In May 2004, the U.S. Department of Labor (DOL) issued final rules setting minimum standards for the timing and content of the notices required under the continuation coverage provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). COBRA allows most employees, spouses, and dependents that lose their health insurance coverage under an employer’s group health plan to continue coverage, at their own expense, for a specified period.

The most notable change resulting from the COBRA Final Rules is the requirement to provide notice when COBRA is not available to an employee, spouse or dependent. This means that employers must provide an otherwise qualified beneficiary with a written explanation of why he or she is not entitled to continuation coverage. Example: A subscriber/qualified beneficiary fails to inform the employer of a dependent child’s loss of eligibility within 60 days of the eligibility termination date. The employer is required to provide a written notice to the dependent child indicating continuation coverage is not available due to the tardiness of the notice.

ETF recently revised the Continuation – Conversion Notice (ET-2311) to comply with the COBRA Final Rules. (Please discard continuation notices with revision dates prior to 04/2005.) The revised form includes the following:

  • Revisions to the instruction sheet, including the addition of a check box for the employer to indicate whether the qualified beneficiary is eligible or not eligible for continuation coverage. Employers are now required to issue a Continuation – Conversion Notice to qualified beneficiaries indicating the reason(s) they are not entitled to continuation coverage.
  • Revisions to the “Applicant/Qualified Beneficiary Information” section of the notice completed by the employer. Per Federal COBRA law, notice is to be provided to each qualified beneficiary. For example, should an employee with family coverage terminate employment, the employer must provide notice to all covered dependents.
    • The employer must provide the employee with one notice indicating the relationship and names of all qualified beneficiaries if, on the basis of the most recent information available to the employer, all qualified beneficiaries reside at the same address as the employee.
    • The employer must mail one notice per address in the event qualified beneficiaries reside at addresses different from that of the employee.
  • Revisions to the information listed in the section completed by the applicant.
  • Changes to the employer section at the bottom of the form include:
    • Addition of an item explaining why a qualified beneficiary is not eligible for continuation coverage. Employers must complete when qualified beneficiary is not eligible for continuation.
    • Deletion of item asking for the date through which premiums are currently paid.
    • Revision of item inquiring about coverage type.

One Continuation – Conversion Notice is attached to this bulletin. You should request an additional supply by one of the following methods:

  • Use the on-line order form through our Internet site at http://etf.wi.gov. Please enter all requested information, especially your Employer Identification Number (EIN).
  • Contact ETF’s Supply and Mail Services, (608) 266-3302;
  • Complete the attached form and mail or fax it to:

    ETF Supply and Mail Services
    P.O. Box 7931
    Madison, WI 53707-7931
    Fax: (608) 267-4549

The COBRA Final Rules are available on the DOL Internet site, www.dol.gov.

A summary of the final rules appears in the table below:

Notice
Given By/To
Timing
ETF Form
General (or Initial) Notice Employer to employee and spouse Generally, within 90 days after coverage begins Summary Plan Description (SPD) in Section B of It's Your Choice Booklet
Employee Qualifying Event Notice Covered employee or qualified beneficiary to employer Within 60 days after the qualifying event Health Insurance Information Change form (ET-2329)
Election Notice Employer to covered employees and qualified beneficiaries Generally, within 14 days after notice of qualifying event Continuation - Conversion Notice (ET-2311)
Notice of COBRA Unavailability (New) Employer to covered employees and qualified beneficiaries Generally, within 14 days after notice of qualifying event Continuation - Conversion Notice (ET-2311)
Notice of Early Termination of COBRA (New) Employer to covered employees and qualified beneficiaries "As soon as practicable" after it is determined COBRA must terminate Employer Required to Send Letter

The Department is updating the Health Insurance Information Change form (ET-2329) in order to collect address information on deleted dependents. The information will be used in conjunction with the Continuation – Conversion Notice (ET-2311). The revised form will be available later this year, along with an Employer Bulletin explaining the changes. Employers with questions about this bulletin should contact ETF’s Employer Communication Center at (608) 264-7900.