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COBRA Conundrums
The COBRA Notice of Unavailability – The DOL’s Etiquette Rule
Speak when spoken to. It is an old-fashioned rule that many parents teach their children.

While this concept originated in parenting, it may have a place in benefits administration too. Let me explain.

A situation came up the other day that made me revisit the COBRA notice of unavailability requirement. Upon review, it donned on me that the Department of Labor (DOL) is simply reminding plan administrators to speak when spoken to.

The requirement to furnish a notice of unavailability is found in the DOL COBRA regulations and not the COBRA statute itself. The DOL regulation says that when a plan administrator receives a proper notice relating to a qualifying event, second qualifying event or determination of disability by the Social Security Administration, and the plan administrator determines that the individual who is the subject of the notice is not entitled to COBRA, or an extension of COBRA coverage, the plan administrator must respond with an explanation.  DOL Reg. 2590.606-4(c).

When is a Notice of Unavailability Required?

Under the regulations, a Notice of Unavailability is required when the plan administrator determines COBRA (or an extension of the COBRA period) is not available after receiving:

  • Notice of a Qualifying Event;
  • Notice of a Second Qualifying Event; or
  • Notice that an individual has been determined disabled by the Social Security Administration.

Some examples of when the notice of unavailability would arise are:

  • A Qualified Beneficiary sends a disability determination to the plan administrator outside of the plan’s deadline. The plan administrator should send a notice of unavailability of the disability extension.
  • An employee sends the plan administrator a notice that her and her spouse have become legally separated. However, the plan does not terminate coverage upon legal separation, only upon divorce. The plan administrator determines that no qualifying event has occurred.

Who Should Receive a Notice of Unavailability?

The plan administrator must send the notice of unavailability to the person who was expecting to receive COBRA or an extension of COBRA coverage. 

Sometimes the notice of unavailability must be sent to an individual other than the individual that provided the qualifying event notice. Consider the example above of the legal separation. The employee notified the employer of the legal separation as he/she should have. However, the legally separated spouse is the person who is owed a notice of unavailability as he/she is the individual expecting COBRA.

The notice of unavailability generally must be provided by the plan administrator within 14 days of receiving a notice of qualifying event. The plan administrator can send one notice of unavailability for all individuals residing at the same address but must send separate notices to individuals living at different addresses. 

What Information Must the Notice of Unavailability Contain?

Unlike other COBRA notices, the DOL does not publish a model notice of unavailability. The regulations contain only two content requirements:

  • The notice must explain why COBRA coverage (or an extension of COBRA coverage) is not available; and
  • The notice must be written in a manner calculated to be understood by the average plan participant.

Why it Might Make Sense to Go Above and Beyond.

The preamble to the DOL’s COBRA regulations explains the purpose of the notice of availability – to avoid misunderstandings. Specifically:

It is the view of the [DOL] that when a participant or beneficiary submits a request to the plan administrator for COBRA continuation coverage, the individual has an expectation of coverage unless (or until) he or she is notified to the contrary. The [DOL] continues to believe that furnishing the unavailability notice in such circumstances will avoid misunderstandings in this area.

Avoiding misunderstandings is always a good goal as is clear and open communication. It would seem that situations beyond those required might deserve a notice of unavailability. For example, a plan administrator could prevent future hassles by notifying an individual that he or she is not eligible for COBRA due to termination for gross misconduct. A plan administrator would also be wise to send a notice of unavailability of COBRA when coverage is terminated due to nonresponse following a dependent eligibility audit. 

Speak when spoken to. The DOL’s notice of unavailability requirement reminds us to mind our manners and provide a response to individuals requesting and expecting COBRA.

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