COBRA Notification Letter

A COBRA Notification Letter in the United States sets out, in writing, the request or notice the sender directs to the recipient.

The COBRA Notification Letter is legally mandated by federal regulations and must satisfy specific content requirements set out in 29 C.F.R. § 2590.606-4, issued by the US Department of Labor Employee Benefits Security Administration (EBSA). The required notice must inform qualified beneficiaries of: the right to elect COBRA continuation coverage; the qualifying event that triggered the right; the date coverage will terminate if COBRA is not elected; the plan coverage period available (18 or 36 months depending on the qualifying event); the premium amounts; the 60-day election period; the 45-day deadline for first premium payment; and the beneficiary's rights to convert to an individual policy at the end of the COBRA period.

The Department of Labor provides a Model General Notice of COBRA Continuation Coverage Rights and a Model Election Notice for employers and plan administrators to use as a safe harbor, ensuring compliance with the content requirements of 29 C.F.R. § 2590.606-4. Employers that use the DOL model notices in the required timeframes are protected from certain penalties even if individual circumstances make the model notice technically incomplete. The model notices are available on the EBSA website.

Two distinct COBRA notices are required by federal law. The first is the General Notice (also called the Initial Notice), which must be provided to covered employees and their spouses within 90 days of their enrollment in the group health plan, informing them of their COBRA rights in general terms. The second is the Election Notice, which must be provided within 44 days of a qualifying event — specifically, within 30 days of the employer's notice to the plan administrator plus the plan administrator's 14-day response period — informing the specific qualified beneficiaries of their right to elect COBRA and the details of the available coverage.

The Affordable Care Act (ACA) of 2010 created alternative coverage options — including marketplace exchange plans with premium subsidies under the premium tax credit under 26 U.S.C. § 36B — that can be more affordable than COBRA for many individuals. The COBRA Election Notice must, since 2014, include information about marketplace exchange coverage alternatives and the special enrollment period available to individuals losing employer coverage.

A COBRA Notification Letter must be sent within 44 days of every qualifying event that causes a covered employee, spouse, or dependent child to lose group health insurance coverage under an employer-sponsored plan subject to federal COBRA.

Employment termination is the most common qualifying event requiring a COBRA Notification Letter. Voluntary resignation, involuntary layoff or reduction in force, retirement, or any termination other than for gross misconduct triggers the employer's obligation to notify the terminated employee and any covered dependents of their COBRA rights within 44 days. The employer's HR department or payroll service is typically responsible for tracking terminations and issuing COBRA notices.

Reduction in working hours below the employer's minimum threshold for health plan eligibility — for example, reducing a full-time employee to part-time — is a qualifying event requiring a COBRA notice even when the employee remains employed. The COBRA notice must be issued when the hours reduction causes a loss of coverage, regardless of whether the reduction was voluntary or involuntary.

Divorce or legal separation of a covered employee triggers the need for a COBRA notice directed to the former spouse and any dependent children who were covered under the employee's health plan and whose coverage ends as a result. Employers typically learn of divorce qualifying events through direct employee notification, since the employer is not automatically informed of an employee's marital status change. Federal COBRA regulations at 29 C.F.R. § 2590.606-3 require the employee (or the former spouse) to notify the plan administrator of a divorce or separation qualifying event within 60 days.

A covered employee's death triggers COBRA rights for the surviving spouse and dependent children, who would otherwise lose coverage. Employers must issue COBRA notices promptly after becoming aware of an employee's death.

An employee becoming eligible for Medicare (Part A or Part B) is a qualifying event for the employee's covered dependents, who lose secondary coverage when the primary insured moves to Medicare. A COBRA notice for dependents must be issued in this circumstance.

Small employers not subject to federal COBRA must review their state's mini-COBRA requirements, as most states require a similar notification letter to be sent under state insurance law whenever an employee of a small employer loses health coverage due to a qualifying event.

A legally compliant COBRA Notification Letter must contain all required elements specified by the Department of Labor's regulations at 29 C.F.R. § 2590.606-4 and should be based on or closely follow the DOL model election notice to qualify for the regulatory safe harbor.

The plan identification section names the group health plan offering COBRA continuation coverage, the employer sponsoring the plan, and the plan administrator — which may be the employer itself, a third-party administrator (TPA), or an insurance carrier. The name and contact information of the plan administrator must be provided for the qualified beneficiary to direct questions and election communications.

The qualifying event identification section describes the specific qualifying event that caused the loss of coverage (e.g., termination of employment, reduction in hours, divorce, death of the covered employee, loss of dependent status), the date the qualifying event occurred, and the date group health coverage will terminate if COBRA is not elected.

The qualified beneficiary identification section names each qualified beneficiary to whom the election notice is directed, confirming each individual's right to elect COBRA continuation coverage. In most cases this includes the terminated employee, spouse, and each covered dependent child.

The coverage available section describes the health plan coverage available under COBRA — medical, dental, and/or vision — specifying whether each type of coverage is available for continuation and whether the plans available are the same as or limited compared to the coverage available to active employees.

The COBRA premium section states the monthly premium for each type of coverage and for each family tier available (employee only, employee plus spouse, employee plus children, family). The premium may be up to 102% of the full group plan cost. The payment deadline for the first premium (45 days from election) must be stated.

The election period section states that the qualified beneficiary has 60 days from the date of the notice (or the date coverage would be lost, whichever is later) to elect COBRA continuation coverage, and provides a clearly marked election form or instructions for electing coverage. The 60-day election period is statutory under 29 U.S.C. § 1165 and cannot be shortened.

The duration of coverage section states the maximum period of COBRA continuation coverage available — 18 months for employment termination or hours reduction; 36 months for divorce, death, Medicare entitlement, or loss of dependent status — and identifies circumstances that may extend coverage (Social Security Disability determination) or terminate coverage early (obtaining other group health coverage, failure to pay premium).

The marketplace notice section, required since 2014, informs the qualified beneficiary of the availability of coverage through the Health Insurance Marketplace established under 42 U.S.C. § 18031, the special enrollment period triggered by loss of employer coverage, and the availability of premium tax credits for eligible individuals.