49894 Federal Register / Vol. 62, No. 184 / Tuesday, September 23, 1997/ Proposed Rules

1All references herein to ERISA sections 601–608

should be read to refer also to corresponding

provisions in Code section 4980B.

2The term group health plan is defined in section

607(1) to mean an employee welfare benefit plan

providing medical care (as defined in section 213(d)

of the Code) to participants or beneficiaries directly

or through insurance, reimbursement, or otherwise.

Plans that provide substantially only long-term care

services (as defined in section 7702B(c) of the Code,

however, are not included. Further, although

governmental plans are excepted from coverage

under Title I of ERISA, see ERISA section 4(b)(1),

COBRA amended the Public Health Service Act, 42

U.S.C. § 300bb–1 et seq., to impose requirements for

the provision of health care continuation coverage

similar to those contained in Part 6 of Title I on

certain State and local employers.

3Section 607(3) defines qualified beneficiary

generally as any person, other than a covered

employee, who, on the day before the qualifying

event for that employee, was a beneficiary under

the plan as the spouse or dependent child of the

covered employee. In the case of a qualifying event

that is the termination or reduction of hours of the

covered employee, the term also includes the

covered employee. In the case of a qualifying event

that is the bankruptcy of the plan sponsor, the term

qualified beneficiary includes the covered

employee if he or she had retired on or before the

date of substantial elimination of coverage, and any

individual who, on the day before the qualifying

event, was a beneficiary under the plan as the

surviving spouse of the covered employee. The

Health Insurance Portability and Accountability Act

of 1996 (HIPAA) expanded the definition of

qualified beneficiary contained in section 607(3) to

include children who are born to or placed for

adoption with the covered employee during the

duration of continuation coverage.

4Section 603 defines a qualifying event as any of

the following: 1) the death of the covered employee;

2) the termination (other than by reason of gross

misconduct) or reduction in hours of the covered

employee’s employment; 3) the divorce or legal

separation of the covered employee from the

employee’s spouse; 4) the covered employee’s

becoming entitled to benefits under Medicare; 5) a

dependent child’s ceasing to be a dependent under

the terms of the plan; or 6) the bankruptcy of the

employer from which the covered employee retired.

Section 607 defines other relevant terms, such as

‘‘covered employee’’ and ‘‘group health plan,’’ for

the purposes of the COBRA provisions.

5A group health plan may, pursuant to section

607(5), provide instead that the period of

continuation coverage (and the period during which

the employer must notify the plan administrator of

a qualifying event) will begin on the date the

qualified beneficiary loses coverage, rather than the

date of the qualifying event.

6Prior to enactment of HIPAA, section 602(2)

provided that a qualified beneficiary would be

entitled to the 11-month disability extension only

if he or she was disabled at the time that the

covered employee suffered the termination or

reduction in hours of employment. HIPAA also

amended section 602(2) to clarify that the 11-month

disability extension applies to the non-disabled

family members of a disabled qualified beneficiary

who meets the requirements for the extension,

provided those family members are also entitled to

continuation coverage.

7For example, a qualified beneficiary’s right to

continuation coverage will cease if an employer

ceases to provide group health coverage to its

employees, if the qualified beneficiary fails to pay

required premiums in a timely fashion, or if the

qualified beneficiary becomes covered under

another group health plan that does not contain any

invalidating pre-existing condition exclusions or

limitations. See § 602(2) (B), (C), (D).

DEPARTMENT OF LABOR

Pension and Welfare Benefits

Administration

29 CFR Part 2580

Health Care Continuation Coverage

AGENCY: Pension and Welfare Benefits

Administration, Labor.

ACTION: Request for information.

SUMMARY: This document is a request for

information to assist the Department of

Labor (the Department) in assessing the

need for a regulation clarifying certain

statutory notice requirements set forth

in section 606 of Title I of the Employee

Retirement Income Security Act (ERISA)

and in section 4980B of the Internal

Revenue Code (the Code). These

statutory notice requirements were

enacted as part of the continuation

coverage provisions included in the

Consolidated Omnibus Budget

Reconciliation Act of 1985 (COBRA).

The continuation coverage provisions,

commonly referred to as the COBRA

provisions, generally require group

health plans to provide participants and

beneficiaries who under certain

circumstances would otherwise lose

coverage (qualified beneficiaries) with

the opportunity to elect to continue

coverage under the plan at group rates

for a limited period of time.

The Department anticipates that

information and views provided by plan

sponsors, plan fiduciaries, service

providers to plans, plan participants

and beneficiaries, and other interested

persons will aid it in assessing the need

for issuing a regulation to explicate the

notice requirements of the COBRA

provisions and the appropriate scope

and content of any such regulation. A

regulation on the notice requirements of

the COBRA provisions would affect

participants and beneficiaries (including

qualified beneficiaries) of certain group

health plans, as well as the sponsors

and fiduciaries of such plans.

DATES: Written comments should be

received by the Department of Labor on

or before November 24, 1997.

ADDRESSES: Comments (preferably, at

least six copies) should be addressed to

the Office of Regulations and

Interpretations, Pension and Welfare

Benefits Administration, Room N–5669,

U.S. Department of Labor, 200

Constitution Ave., NW, Washington, DC

20210. Attn: COBRA RFI. All comments

received will be available for public

inspection at the Public Disclosure

Room, Pension and Welfare Benefits

Administration, U.S. Department of

Labor, Room N–5507, 200 Constitution

Ave., NW, Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT:

David Lurie, Office of Regulations and

Interpretations, Pension and Welfare

Benefits Administration, (202) 219–

7461. This is not a toll-free number.

SUPPLEMENTARY INFORMATION:

A. Background

1. The COBRA Provisions

The COBRA provisions, sections 601

to 608 of Title I of ERISA, and the

related portions of section 4980B of the

Code,1 establish the requirement that

any ‘‘group health plan’’ 2 maintained by

an employer that employs 20 or more

employees must offer ‘‘qualified

beneficiaries’’ 3 the opportunity to elect

‘‘continuation coverage’’ under the plan

following certain events (qualifying

events) that would otherwise result in

the loss of coverage.4

Under section 602(2)(A), the nature of

the qualifying event determines the

length of continuation coverage that an

employer must make available to a

qualified beneficiary. If the qualifying

event is either a termination or a

reduction in the hours of the covered

employee’s employment, the period of

continuation coverage is up to 18

months from the date of the qualifying

event.5 This period is extended for an

additional 11 months, to make a total

period of 29 months of continuation

coverage, for all qualified beneficiaries

with respect to a covered employee, if

any of such qualified beneficiaries has

been determined, pursuant to Title II or

Title XVI of the Social Security Act, to

have been disabled at any time within

the first 60 days of continuation

coverage.6 Furthermore, in cases

involving a termination or reduction of

hours of employment, the occurrence of

another qualifying event during the

initial 18 months of continuation

coverage will extend the continuation

coverage period to up to 36 months from

the date of the original qualifying event.

In all other cases, the period of

continuation coverage is generally up to

36 months from the date of the

qualifying event. The occurrence of

certain events subsequent to election of

continuation coverage can cause the

period of continuation coverage to end

prior to the end of the otherwise

applicable continuation coverage

period.7

The COBRA provisions specify the

nature of the continuation coverage that

must be offered, the premiums that a

qualified beneficiary may be required to

pay as a predicate for such continuation

coverage, and the manner in which plan

administrators must provide qualified
Federal Register / Vol. 62, No. 184 / Tuesday, September 23, 1997/ Proposed Rules 49895

8H. Rep. No. 99–453, 99th Cong., 1st Sess.

(December 18, 1995).

9The Conference Report indicates further 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

Secretaries of Labor and the Treasury. Id. at 562–

63. Pursuant to its authority, the Treasury

Department has proposed certain regulations

relating to continuation coverage. See Prop. Treas.

Reg. § 1.162–26 (52 Fed. Reg. 22716, June 15, 1987).

10Advisory Opinion 94–17 (April 9, 1994) states

that a group health plan is required to provide the

initial notice required by section 606(a)(1) only to

individuals who may at some time become entitled

to elect continuation coverage under the plan, i.e.,

someone who is or becomes covered under the

plan. Accordingly, a group health plan is required

to provide the initial notice to a covered employee’s

spouse only if, and at the time, the spouse

commences coverage under the plan.

11On June 26, 1986, the Department issued ERISA

Technical Release 86–2 (TR 86–2), ‘‘Guidance on

Group Health Continuation Coverage Notification

Provisions,’’ to provide for use by employers a

model initial notice satisfying the requirements of

section 606(a)(1). TR 86–2 emphasizes that use of

the model notice is not the only method of

achieving good faith compliance with a reasonable

interpretation of the initial notice requirement.

Additionally, TR 86–2 provides guidance with

respect to certain procedural issues not addressed

by the statute and the Department’s view of good

faith compliance in the absence of regulations.

First, TR 86–2 states that sending a notice by firstclass mail to the last known address of a covered

employee and his or her spouse (if any) would

evince a good faith effort at compliance. Second, TR

86–2 states that, if a spouse’s last known address

is the same as the covered employee’s, a single

mailing addressed to both would be considered to

be in good faith compliance with the requirement

set forth in 606(a)(1). Finally, TR 86–2 states that

if an employer (or plan administrator) determines

that a spouse no longer resides with the covered

employee, good faith compliance could be achieved

by a separate, first-class mailing to the last known

address of the spouse.

12 In the case of a multiemployer plan, the

requirement that the employer notify the plan

administrator of the termination or reduction in

hours of the covered employee’s employment is

satisfied if the plan provides that the plan

administrator will determine the occurrence of such

a qualifying event.

13 If the plan is a multiemployer plan, this notice

must be given within the time period set by the

plan.

14Prop. Treas. Reg. § 1.162–26, Q&A 33, states

that this notice is to be provided to the ‘‘employer

or other plan administrator.’’

15Prop. Treas. Reg. § 1.162–26, Q&A 33, states

that if the notice is not sent to the employer or other

plan administrator within 60 days after the later of

the date of the qualifying event or the date that the

qualified beneficiary would lose coverage, the

group health plan does not have to offer the

qualified beneficiary continuation coverage.

16Advisory Opinion 90–16 (May 3, 1990) states

that the administrator of a group health plan cannot

be relieved, by delegation, contract, or otherwise, of

responsibility for providing the notice required by

section 606(a)(4).

17 In an information letter dated April 11, 1995,

the Department stated that, in cases in which the

employer of employees covered by a group health

plan is also the plan administrator, both the 30-day

notice period for the employer’s notice of a

qualifying event and the 14-day period for the

administrator’s notice of the right to elect

continuation coverage would continue to apply.

Accordingly, an employer who is also the plan

administrator has a maximum period of 44 days

from the date on which the qualifying event

occurred to provide such notice.

beneficiaries with the opportunity to

elect continuation coverage and to pay

any required premiums. See sections

602, 604, 605.

Section 606 establishes a series of

related notice requirements that

ultimately trigger, under section 605,

the beginning of the period of time

during which the qualified beneficiary

may elect continuation coverage (the

election period). These notice

requirements are described in detail in

Section 2, below.

Section 608 grants the Secretary of

Labor generally the authority to issue

regulations to carry out the provisions of

Part 6 of Title I of ERISA. In order to

avoid duplicate and perhaps

inconsistent regulations, the Conference

Report accompanying COBRA 8 provides

that the Secretary of Labor is authorized

to promulgate regulations implementing

the disclosure and reporting

requirements of COBRA, while the

Secretary of the Treasury is authorized

to issue regulations defining the

required continuation coverage.9 The

Conference Report further stated that

pending the promulgation of

regulations, employers would be

required to operate ‘‘in good faith

compliance with a reasonable

interpretation of the substantive rules

and notice requirements’ H. Rep. 99–

453 at 562–63.

2. COBRA Notices

Section 606 of ERISA provides for a

series of related notices, beginning with

the requirement for a general notice of

the rights provided under COBRA and

culminating with an individualized

notice to a qualified beneficiary entitled

to elect continuation coverage.

(a) Initial Notice. Section 606(a)(1)

requires a group health plan to provide

to each covered employee and spouse of

the employee (if any) at the time of

commencement of coverage under the

plan 10 a written notice describing the

rights provided under COBRA.11

(b) Notice of Qualifying Event. Section

606 (a)(2) and (a)(3) require that the plan

administrator of a group health plan be

notified that a qualifying event has

occurred. The nature of the qualifying

event determines whether this notice

obligation falls on the employer of a

covered employee or on the covered

employee or qualified beneficiary. If the

qualifying event is the death of the

covered employee, the termination or

reduction of hours of the covered

employee’s employment,12 the covered

employee’s becoming entitled to

Medicare, or a bankruptcy proceeding of

the employer, section 606(a)(2) requires

the employer of the covered employee

to provide notice of the qualifying event

to the plan administrator. The employer

must provide this notice within 30 days

of the date the event occurs.13 If the

qualifying event is the divorce or legal

separation of the covered employee or a

dependent child’s ceasing to be a

dependent under the terms of the plan,

section 606(a)(3) requires the covered

employee or qualified beneficiary to

provide the notice of qualifying event to

the plan administrator.14 The covered

employee or qualified beneficiary must

provide this notice within 60 days of the

date the qualifying event occurs.15

(c) Notice of Right to Elect

Continuation Coverage. Section

606(a)(4) requires a plan administrator

to notify qualified beneficiaries of their

right to elect continuation coverage.16

This notice must be provided within 14

days of the date on which the

administrator receives the notice that a

qualifying event has occurred.17

Pursuant to section 605(1), a qualified

beneficiary must be provided a period of

at least 60 days, beginning on the later

of the date of the loss of coverage due

to the qualifying event or the date the

notice of the right to elect continuation

coverage was sent, within which to elect

continuation coverage.

(d) Social Security Disability Notice.

Section 602 provides that, if a qualified

beneficiary becomes disabled, as

determined under Title II or XVI of the

Social Security Act, at any time during

the first 60 days of continuation

coverage, he or she is entitled to a total

of up to 29 months of continuation

coverage, rather than only 18 months of

continuation coverage. Section 606(a)(3)

provides that, in order to obtain the 11-

month extension, such a qualified

beneficiary must notify the plan

administrator of the determination of

disability within 60 days after the date

of such determination. Section 602 also

requires that this notice be provided

before the end of the original 18-month

period of continuation coverage. The

qualified beneficiary must also notify

the plan administrator of any final

determination that the qualified

beneficiary is no longer disabled. This

notice must be provided within 30 days

of the date of such determination.
49896 Federal Register / Vol. 62, No. 184 / Tuesday, September 23, 1997/ Proposed Rules

18 In the case of a multiemployer plan, the tax is

imposed on the plan.

19 If there is more than one qualified beneficiary

with respect to the same qualifying event, the

maximum amount of tax that may be imposed on

all failures on any day with respect to such

qualified beneficiaries is $200.

20As described in footnotes 2 and 4, above,

HIPAA clarified the definition of ‘‘qualified

beneficiary’’ and the scope of the 11-month

extension for disabled qualified beneficiaries. In

addition, section 421(e) of HIPAA required group

health plans subject to COBRA to notify individuals

who have elected continuation coverage no later

than November 15, 1996, of the changes to COBRA

enacted by HIPAA. The Department issued

Technical Release 96–1 on October 15, 1996, to

inform employers and plan administrators of the

changes in the COBRA rules made by HIPAA and

of their obligation under HIPAA to notify qualified

beneficiaries of such changes. The Department, as

a matter of enforcement policy, deemed that

supplying qualified beneficiaries with a written

copy of the information contained in TR 96–1, or

with a copy of TR 96–1, would constitute

compliance with the notice requirement contained

in section 421(e) of HIPAA if the information was

sent to each qualified beneficiary by first class mail

at the last known address of the qualified

beneficiary by November 1, 1996.

21Pursuant to ERISA section 701, which was

added by HIPAA, certificates of creditable coverage

are required to be provided to participants and

beneficiaries under group health plans under

certain circumstances. These certificates serve to

establish a participant’s or beneficiary’s period of

‘‘creditable coverage,’’ which will reduce or

eliminate the period for which a group health plan

can limit or exclude coverage of a preexisting

condition of such participant or beneficiary.

22See, e.g., Underwood v. Fluor Daniel, Inc., No.

95–3036 (4th Cir. 1997); Stanton v. Larry Fowler

Trucking, Inc., 52 F.3d 723 (8th Cir. 1995); Bixler

v. Central Pennsylvania Teamsters Health &

Welfare Fund, 12 F.3d 1292 (3rd Cir. 1993);

Meadows v. Cagle’s, Inc., 954 F.2d 686 (11th Cir.

1992); Kidder v. H&B Marine, Inc., 932 F.2d 347

(5th Cir. 1991); Truesdale v. Pacific Holding Co./

Hay Adams Division, 778 F. Supp. 77 (D.D.C. 1991).

3. Statutory Sanctions for Failure to

Comply With COBRA Notice

Requirements

The COBRA provisions impose

sanctions for failure to comply with

certain of the notice requirements of

ERISA section 606.

a. ERISA Section 502

Section 502(a)(1)(A) of ERISA permits

participants and beneficiaries to bring a

civil action for the relief provided in

section 502(c). Section 502(c)(1)

provides that a plan administrator that

fails to provide an initial notice or a

notice of the right to elect continuation

coverage may, in the court’s discretion,

be held liable to the participant or

beneficiary for up to $100 per day from

the date of the failure to provide notice

and for any other relief that the court

deems proper.

b. Code Section 4980B

Code section 4980B imposes excise

taxes on the employer,18 and, in certain

circumstances, a person (other than an

employee) who is responsible for

administering or providing benefits

under the plan and whose act or failure

to act caused the failure, for the failure

of a group health plan to meet any of the

requirements of the COBRA provisions,

including the relevant notice

requirements. Pursuant to section

4980B(b)(1), the amount of the tax on

any failure with respect to a qualified

beneficiary is $100 per day 19 for each

day of non-compliance. Code section

4980B(b) establishes a number of

standards relating to minimum and

maximum amounts of tax and specifies

situations in which the tax will not be

imposed.

4. Health Insurance Portability and

Accountability Act (HIPAA)

HIPAA, which was signed into law on

August 21, 1996, made certain

substantive changes to the COBRA

provisions. Those changes became

effective January 1, 1997, regardless of

the date of any qualifying event. Among

other changes,20 HIPAA amended

section 602(2)(D)(i), with respect to

circumstances under which a group

health plan may cease providing

continuation coverage to a qualified

beneficiary because that qualified

beneficiary has become covered under

another group health plan, to reflect the

changes made by HIPAA with respect to

preexisting condition exclusions and

limitations. Specifically, the COBRA

provisions mandate that, if the new plan

limits or excludes coverage for any

preexisting condition of the qualified

beneficiary, the plan providing

continuation coverage cannot cease

making continuation coverage available

solely due to the coverage under the

new plan. However, HIPAA provides

that, if the new group health plan limits

or excludes coverage for preexisting

conditions, but those limits or

exclusions would not apply to or would

be satisfied by a qualified beneficiary

under the HIPAA rules limiting preexisting coverage exclusions, the plan

providing continuation coverage may

cease providing it. As a separate matter,

HIPAA provides that the amount of an

individual’s ‘‘creditable coverage’’ (see

footnote 21) must include any period of

time during the relevant look-back

period for which the individual was

covered by a group health plan as a

result of the individual’s having elected

continuation coverage.

5. Interim HIPAA Regulations

On April 8, 1997, the Department, in

conjunction with the IRS and the Health

Care Financing Administration of the

Department of Health and Human

Services, published in the Federal

Register interim rules and a proposed

rule implementing certain provisions of

HIPAA (62 FR 16894). The Department’s

interim regulation relating to certificates

of creditable coverage,21 29 CFR

2590.701–5 (62 FR 16946, 16947),

provides that a qualified beneficiary is

entitled to a certificate both at the time

that coverage would be lost in the

absence of continuation coverage and, if

the qualified beneficiary has elected

continuation coverage, at the time that

the continuation coverage ceases. In

addition, in cases in which the person

is entitled to elect continuation

coverage, the first certificate must be

furnished no later than the time a notice

of the right to elect continuation

coverage is required to be provided. The

second certificate, after continuation

coverage ceases, must be provided

within a reasonable time after

continuation coverage ceases.

B. Circumstances Suggesting a Need for

Regulatory Guidance

As discussed herein, the COBRA

provisions of ERISA impose obligations

on employers, plan administrators, plan

participants, and qualified beneficiaries

regarding disclosure of information

through notices and the ensuing right to

elect continuation coverage. Section 606

of ERISA provides a statutory

framework within which these notices

have significance as a means of

providing affected parties with adequate

notice at appropriate times of the rights

granted under the statutory scheme. The

delivery of notices also delineates

limited time periods during which such

rights must be exercised. Failure to

comply with any of the notice

requirements carries consequences for

the party failing to provide notice,

whether in the form of potential liability

to provide coverage under the group

health plan, sanctions imposed on

employers or plan administrators, or a

loss of coverage or an opportunity to

elect continuation coverage on the part

of qualified beneficiaries. The

Department believes the following

factors suggest a possible need for

guidance concerning the COBRA notice

provisions.

First, a significant amount of the

relevant litigation that has occurred

since enactment of the COBRA

provisions has involved failures or

alleged failures to comply with the

notice requirements.22 Second, many of

the numerous requests that the

Department has received from

participants for assistance with the

COBRA provisions have involved
Federal Register / Vol. 62, No. 184 / Tuesday, September 23, 1997/ Proposed Rules 49897

allegations that employers’ and plan

administrators’ notices have been not

forthcoming or have been inadequate or

confusing. Third, the COBRA provisions

have been amended several times since

publication of TR 86–2, reducing its

value as a model for good faith

compliance. Fourth, the obligations

imposed on group health plans by

HIPAA and other legislation with

respect to coordination of continuation

coverage with other statutory rights

have further increased the importance of

proper implementation of the COBRA

notice provisions. For these reasons, the

Department believes that regulatory

guidance clarifying the notice

requirements may aid employers and

plan administrators in complying with

the COBRA notice requirements and

may also provide participants and

beneficiaries with a better

understanding of their rights and

obligations.

C. Issues on Which Information is

Requested

To assist the Department in assessing

the need for guidance concerning the

COBRA notice requirements, the

Department invites interested parties to

submit information relating to whether

the Department should promulgate

standards with regard to the content of

the notices, the delivery and timing of

these notices, and the consequences of

either satisfying or failing to satisfy the

notice requirements, and what such

standards should be.

In order to assist interested parties in

responding, this notice contains a list of

specific questions the answers to which

the Department believes would be

helpful in considering guidance in this

area. It is requested that the public, in

responding to specific questions

presented by this Notice, refer to the

question number listed in this Notice.

Reference to the appropriate question

number will aid the Department in

analyzing submissions.

The questions provided herein may

not address all issues relevant to the

development of the regulation.

Accordingly, the Department further

invites interested parties to submit

additional comments on any other

matters that they believe may be

pertinent to the Department’s

consideration of guidance on this

subject.

Specific areas with respect to which

the Department is interested include:

I. Initial Notice to Covered Employees

and Spouses

A. What information should be

required to be included in the initial

notice to covered employees and

spouses?

B. Would ‘‘model’’ language with

respect to any of the required

information be helpful?

C. Should the Department provide an

updated, revised ‘‘model’’ notice to

replace that published in TR 86–2?

D. In TR 86–2, the Department

indicated that furnishing one initial

notice to participants and spouses

residing at the same address would be

adequate. Should the Department

continue to view this method of

furnishing information to a spouse

residing with a participant as sufficient?

II. Notice of Qualifying Event

A. What information should be

required to be included in the notice of

qualifying event?

B. In what form should this notice be

required to be provided?

C. Should the required information or

the required form in which this

information is conveyed vary depending

on whether the notice is being given by

the employer or by the covered

employee (or qualified beneficiary)?

D. Should the Department provide

rules under which notice of a qualifying

event is deemed to have been given

when an employer is also the plan

administrator of a group health plan, or

should some formality of

communications be required under such

circumstances?

E. Should the Department provide a

‘‘model’’ notice of qualifying event for

use by employers and qualified

beneficiaries?

F. What, if any, problems have arisen

in connection with compliance with

this notice requirement?

III. Notice of Right to Elect Continuation

Coverage

Section 605 of the COBRA provisions

provides that the election period during

which a qualified beneficiary may elect

continuation coverage must extend for

at least sixty days, measured from the

later of the date on which coverage

otherwise would terminate or the date

on which the notice of the right to elect

continuation coverage is sent to the

qualified beneficiary. The plan

administrator’s provision of the notice

of right to elect continuation coverage,

therefore, initiates the qualified

beneficiary’s right to elect and begins

the running of the period of that right.

The Department, accordingly, believes

that the notice of right to elect

continuation coverage must provide the

qualified beneficiary with the

information relevant to the exercise of

the right. The following questions

should be considered in light of this

concern.

A. What information should be

required to be included in the notice of

the right to elect continuation coverage?

B. For example, should the notice be

required to include:

1. A description of the continuation

coverage that the qualified beneficiary is

entitled to elect;

2. A description of the period over

which such continuation coverage

would be provided;

3. A description of the premiums that

the qualified beneficiary would be

required to pay, including the manner

in which such premiums were

calculated, the dates on which payment

would be due, the address to which

payment should be sent, and the

consequences of nonpayment;

4. An explanation of the election

process, including the period of time

within which an election can be made,

the consequences of electing or failing

to elect continuation coverage, and the

possibility of rescinding an election; or

5. An explanation of any rights that

might arise to cause an extension of the

maximum period of continuation

coverage (such as with respect to any

qualified beneficiary who is determined

to be disabled within the first 60 days

of continuation coverage) and the notice

obligations imposed on any such

qualified beneficiary?

C. Is there other information that

should be required to be included in the

notice of right to elect continuation

coverage, such as the significance of

electing continuation coverage for rights

granted by HIPAA or the FMLA?

D. Should significant information

relevant to the decision whether to elect

continuation coverage be required to be

provided in the notice, or should

inclusion of the information in the

summary plan description (SPD), with a

reference in the notice to the relevant

information in the SPD, be deemed

adequate?

E. Should the Department provide a

‘‘model’’ notice of right to elect

continuation coverage or ‘‘model’’

language on selected subjects for use in

the notice?

IV. Social Security Disability Notice

A. What, if any, problems have

covered employees, qualified

beneficiaries, employers, or plan

administrators encountered in obtaining

the 11-month extension or in

administering the provisions granting

the right to the 11-month extension,

particularly with respect to satisfying

the notice requirements imposed by

sections 602(2)(v) and 606(3)?
49898 Federal Register / Vol. 62, No. 184 / Tuesday, September 23, 1997/ Proposed Rules

V. Other Issues

A. What are the practical and

appropriate means (e.g., written notices,

electronic media, and/or oral

interviews) through which the COBRA

notice requirements should be satisfied?

B. What kinds of procedures should

or may plan administrators establish to

permit qualified beneficiaries to

establish their entitlement to extensions

of the period of continuation coverage,

such as through the occurrence of

second qualifying events or as a result

of disability determinations?

C. What administrative procedures

have plan administrators adopted to

provide additional notices or

information not expressly mandated in

the COBRA provisions, but necessary or

useful in the orderly implementation of

continuation coverage requirements,

such as to explain changes in the

coverage provided under the group

health plan (including changes in the

issuer or service provider), to make

available open enrollment or election

periods provided under the plan, to

enforce due dates for continuation

coverage premiums, or to implement the

termination of continuation coverage

and make available any conversion

options provided under the plan?

All submitted comments will be made

part of the record of the preceding

referred to herein and will be available

for public inspection.

Signed at Washington, DC, this 17th day of

September, 1997.

Olena Berg,

Assistant Secretary for Pension and Welfare

Benefits, U.S. Department of Labor.

[FR Doc. 97–25240 Filed 9–22–97; 8:45 am]

BILLING CODE 4510–29–P