When an employee adds a spouse following a marriage or during open enrollment, is the employer required to send a COBRA Initial Notice to the spouse?

Yes. The COBRA Initial Notice (also known as the COBRA General Notice) must be sent to all newly enrolled employees and spouses within 90 days of participation.

When a newly eligible employee enrolls him/herself and a spouse in the employer’s group health plan, the plan administrator (who is typically the employer plan sponsor) must distribute the COBRA Initial Notice. The notice should be addressed in such a manner that identifies the spouse, such as John and Jane Doe, John Doe and spouse, or Mr. and Mrs. John Doe. The preferred method of delivery is to mail the notice to the employee’s home address (assuming that the plan doesn’t otherwise have knowledge that the employee and spouse do not share an address). A notice that is emailed to the employee would not be considered sufficient notice to a covered spouse.

Many employers have a process in place to notify newly eligible employees, but a common mistake is to overlook employees and spouses that enroll later in the plan, including those who enroll during open enrollment or following a qualifying event. Anytime a previously ineligible or waived employee enrolls in the group health plan, a COBRA Initial Notice must be emailed to the employee and any enrolled spouse.

Please see the following examples, all of which obligate an employer to send the COBRA Initial Notice:

  • Example 1. John is a new hire. After satisfying the waiting period, John enrolls himself in the employer’s medical and dental plans.
  • Example 2. When originally eligible, Marsha waived coverage. During open enrollment, Marsha adds herself and her husband to the medical plan.
  • Example 3. Samantha is enrolled in the employer’s medical, dental and vision plans. She recently got married and added her new husband to all of her employer’s group health plan benefits.

Please note that this requirement applies to all COBRA covered benefits, not just medical. Thus, a notice is required following an employee or spouse’s enrollment in a dental or vision plan, a health FSA or an HRA.

If an employer has failed to properly distribute the notice to enrolled employees and spouses, they should consider a mass mailing to all those that should have previously received. Failure to comply with the notice requirement could result in an ERISA penalty of $110 per day per affected individual. Additionally, if the error isn’t corrected within 30 days of discovery, an additional $100 per day per affected individual civil penalty could be assessed.

Lastly, compliance with the COBRA Initial Notice requirement is important in order for the employer to enforce employee notification deadlines. The notice informs employees and spouses of their obligation to notify the plan within 60 days of a divorce or child ceasing to be eligible under the terms of the plan. If they notify the plan in a timely manner, the plan would offer COBRA up to 36 months to the child or spouse losing coverage. If they notify the plan after the 60-day deadline, the plan isn’t required to offer COBRA. However, if the plan never sent the employee and spouse a COBRA Initial Notice, the employer may be required to offer COBRA regardless of the timeliness of the employee’s notification.

If you’d like additional information on this issue or a copy of the COBRA Initial Notice, please contact your advisor.