Health Care Continuation Coverage

SUMMARY: These proposed regulations contain amendments to notice requirements of the health care continuation coverage (COBRA) provisions of Part 6 of title I of the Employee Retirement Income Security Act of 1974 (ERISA) to better align the provision of guidance under the COBRA notice requirements with the Affordable Care Act provisions already in effect, as well as any provisions of federal law that will become applicable in the future.

EFFECTIVE DATE: Written comments on this notice of proposed rulemaking are invited and must be received by July 7, 2014.ADDRESSES: Written comments may be submitted to the Department of Labor as specified below. Any comment that is submitted will be shared with the other Departments and will also be made available to the public. Warning: Do not include any personally identifiable information (such as name, address, or other contact information) or confidential business information that you do not want publicly disclosed. All comments may be posted on the Internet and can be retrieved by most Internet search engines. No deletions, modifications, or redactions will be made to the comments received, as they are public records. Comments may be submitted anonymously.

Comments, identified by "Health Care Continuation Coverage," may be submitted by one of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

Mail or Hand Delivery: Office of Health Plan Standards and Compliance Assistance, Employee Benefits Security Administration, Room N-5653, U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210, Attention: Health Care Continuation Coverage.

Comments received will be posted without change to www.regulations.gov and available for public inspection at the Public Disclosure Room, N-1513, Employee Benefits Security Administration, 200 Constitution Avenue NW., Washington, DC 20210, including any personal information provided.

FOR FURTHER INFORMATION CONTACT: Amy Turner or Elizabeth Schumacher, Employee Benefits Security Administration, Department of Labor.

Customer service information: Individuals interested in obtaining information from the Department of Labor concerning employment-based health coverage laws may call the EBSA Toll-Free Hotline at 1-866-444-EBSA (3272) or visit the Department of Labor's Web site (www.dol.gov/ebsa).

SUPPLEMENTARY INFORMATION: The continuation coverage provisions, sections 601 through 608 of title I of the Employee Retirement Income Security Act (ERISA), were enacted as part of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), which also promulgated parallel provisions of the Internal Revenue Code (the Code) and the Public Health Service Act (the PHS Act). /1/ These provisions are commonly referred to as the COBRA provisions, and the continuation coverage that they mandate is commonly referred to as COBRA coverage. COBRA, as enacted, provides that the Secretary of Labor (the Secretary) has the authority under section 608 to carry out the provisions of part 6 of title I of ERISA. The Conference Report that accompanied COBRA divided interpretive authority over the COBRA provisions between the Secretary and the Secretary of the Treasury (the Treasury) by providing that the Secretary has the authority to issue regulations implementing the notice and disclosure requirements of COBRA, while the Treasury is authorized to issue regulations defining the required continuation coverage. /2/

FOOTNOTE 1 The Code and PHS Act COBRA provisions, although very similar in other ways, are not identical to the COBRA provisions in title I of ERISA in their scope of application. The PHS Act provisions apply only to State and local governmental plans, and the Code provisions grant COBRA rights to individuals who would not be considered participants or beneficiaries under ERISA. See PHS Act, 42 U.S.C. 300bb-8; Code section 5000(b)(1). END FOOTNOTE

FOOTNOTE 2 H.R. Conf. Rep. No. 99-453, 99th Cong., 1st Sess., at 562-63 (1985). The Conference Report further indicates that the Secretary of Health and Human Services, who is to issue regulations implementing the continuation coverage requirements for State and local governments, must conform the actual requirements of those regulations to the regulations issued by the Secretary and the Treasury. Id. at 563. END FOOTNOTE

On May 26, 2004, the Department of Labor (Department) issued final regulations implementing various provisions of the COBRA notice requirements and model notices to facilitate compliance with the requirement to provide the general notice of continuation coverage (general notice) as well as COBRA continuation election notice (election notice). /3/ The model general notice was issued in an appendix to SEC 2590.606-1 and the model election notice was issued in an appendix to SEC 2590.606-4.

FOOTNOTE 3 69 FR 30084 (May, 26, 2004). END FOOTNOTE

In general, under COBRA, group health plans must provide a written notice of COBRA rights to each covered employee and spouse (if any) "at the time of commencement of coverage" under the plan. Generally, the notice must be furnished to each covered employee and to the employee's spouse (if covered under the plan) not later than the earlier of: (1) Either 90 days from the date on which the covered employee or spouse first becomes covered under the plan or, if later, the date on which the plan first becomes subject to the continuation coverage requirements; or (2) the date on which the administrator is required to furnish an election notice to the employee or to his or her spouse or dependent. /4/

FOOTNOTE 4 See 29 CFR 2590.606-1. END FOOTNOTE

In addition to the general notice, group health plans must provide an election notice at the time of certain qualifying events. /5/ In general, an individual who was covered by a group health plan on the day before a qualifying event occurred may be able to elect COBRA continuation coverage upon a qualifying event (such as termination of employment or reduction in hours that causes loss of coverage under the plan). /6/ Individuals with such a right are called qualified beneficiaries. A group health plan must provide qualified beneficiaries with an election notice, which describes their rights to continuation coverage and how to make an election. The election notice must be provided to the qualified beneficiaries within 14 days after the plan administrator receives the notice of a qualifying event.

FOOTNOTE 5 See 29 CFR 2590.606-4. END FOOTNOTE

FOOTNOTE 6 For more information on COBRA continuation coverage requirements applicable to group health plans, See "An Employer's Guide to Group Health Continuation Coverage Under COBRA," available at www.dol.gov/ebsa/publications/cobraemployer.html. END FOOTNOTE

On May 8, 2013, the Department issued Technical Release 2013-02 and an updated model election notice with additional information regarding health coverage options that will be available beginning January 1, 2014 under the Patient Protection and Affordable Care Act (Affordable Care Act). /7/ The guidance highlighted that some qualified beneficiaries may want to consider and compare health coverage alternatives to COBRA continuation coverage that are available through a new competitive private health insurance market--the Health Insurance Marketplace (Marketplace). The Department also noted that some qualified beneficiaries may also be eligible for a premium tax credit (a tax credit to help pay for some or all of the cost of coverage in plans offered through the Marketplace).

FOOTNOTE 7 See Technical Release 2013-02 available at http://www.dol.gov/ebsa/newsroom/tr13-02.html. END FOOTNOTE

These proposed regulations amend paragraph (g) of SEC 2590.606-1 and paragraph (g) of SEC 2590.606-4 and delete the two appendices containing the model notices to better facilitate provision of updated model election notices and solicit comment before promulgation of final regulations.

II. Overview of the Proposed Regulations

These proposed regulations contain amendments to notice requirements of the COBRA provisions of Part 6 of title I of ERISA to better align the provision of guidance under the COBRA notice requirements with the Affordable Care Act provisions already in effect, as well as provide valuable flexibility to respond to provisions of federal law that will become applicable in the future. The proposed amendment will eliminate the current version of the model general notice contained in the appendix of SEC 2590.606-1 and the model election notice contained in the appendix of SEC 2590.606-4 as these model notices are outdated. Additionally, these proposed regulations make technical changes to the instruction language pointing to the model notices in the appendices in paragraph (g) of SEC 2590.606-1 and paragraph (g) of SEC 2590.606-4. These changes will permit the Department to amend the model notices as necessary and provide the most current versions of the model notices on the Department's Web site. These changes will also eliminate confusion that may result from multiple versions of the model notices being available in different locations. Contemporaneous with issuance of these proposed regulations, the Department is also issuing updated versions of the model general notice and model election notice, as well as guidance announcing the availability of such updated notices. These updated notices reflect that coverage is now available in the Marketplace and the updated model election notice provides information on special enrollment rights in the Marketplace. The Department invites comment on ways to improve or streamline the model notices, whether the Department's provision of new model notices is sufficient and, if not, whether the Department should expand the underlying content requirements or require use of mandatory language.

--This is a summary of a Federal Register article originally published on the page number listed below--

Proposed rules.

CFR Part: "29 CFR Part 2590"

RIN Number: "RIN 1210-AB65"

Citation: "79 FR 26192"

Federal Register Page Number: "26192"

"Proposed Rules"