COBRA Notice After Termination Or Other Qualifying Event

COVER LETTER

As you know, your medical coverage through [employer] ceases on termination of your affiliation with [employer]. Under federal legislation, you and your covered dependents (if any) have the right to elect up to 18 months of continuation coverage. You will be able to extend your coverage for a total of 29 or 36 months in certain situations.

Attached is a package that describes this option in detail. If you desire to continue your medical coverage, you should follow the instructions for completing the enclosed notice of continuation of health care coverage form.

If you have any questions, please call me at [telephone number].

NOTICE TO PERSONS TERMINATING SERVICE WITH [EMPLOYER] AND THEIR SPOUSES AND DEPENDENT CHILDREN

*IMPORTANT NOTICE--READ CAREFULLY*

SUBJECT: Health Care Continuation

In accordance with federal law, you have the right as a former employee or as a spouse or dependent child to purchase continuation of health coverage because the employee’s service with [employer] has terminated. This means that you may continue coverage that you had on the date of the termination of service under any of these plans:

• Major medical plan

• Health maintenance organization

• Dental benefits plan

• Dental maintenance organization

• Flexible benefits plan

I. What You May Elect

You may elect to continue your coverage under one or more of these plans. At the present time, you may not change the plans under which you wish to continue coverage. Moreover, you may not enroll in a plan for which you were not enrolled when the employee left [employer].

Because the employee’s service with [employer] has terminated, you may elect (the spouse and dependent children, if any, may separately elect), without providing evidence of insurability, to continue your group coverage for up to 18 months. At the end of the 18-month continuation period, you will have a conversion right to purchase individual medical coverage.

II. When Continuation Coverage Ends

Your continuation of coverage will end if any of the following occurs:

1. [Employer] terminates all of its health benefits;

2. Payment of either the premium for retroactive coverage or a subsequent monthly premium is received by [employer/insurer/plan administrator] after the grace period has expired;

3. You become covered under another group health plan;

4. You become entitled to Medicare benefits; or

5. You are no longer disabled (if you were disabled at the time of your separation from service or within 60 days of the beginning of continuation coverage).

III. How to Elect Continuation Coverage

The cost of continuation coverage for you and your dependents, if any, is indicated on the following Election of Continuation of Health Care Coverage form.

If you are the former employee and you wish to obtain this coverage for yourself and your dependents, you must complete and return the Election of Continuation of Health Care Coverage form within 60 days of the date that you receive it. (If you are the spouse or dependent child and wish to make a separate election, you must obtain additional election forms from [name].) The form must be sent to the address indicated on the election form.

The envelope in which you mail your election form must be postmarked no later than the sixtieth day after the day on which you receive this notice from [employer]. If you do not elect to purchase the continuation coverage within the 60 days permitted for the election, your health benefits will not be continued and you will not have another chance to purchase the continuation coverage.

You should submit your election form as soon as possible after receiving this notice in order to prevent any delays in receiving any medical or dental benefits and to avoid the possibility of losing your benefits altogether. No claims for benefits or services incurred will be considered for payment until you have submitted your election form and paid the application fee.

IV. Application Fee and Initial Premium Payment

There is an application fee set forth on the following Election of Continuation of Health Care Coverage form. It is important that your check for the application fee accompany the election form. You will not preserve your right to a continuation of your coverage unless this payment is submitted with your election form.

The premium for one full month of coverage, payable to [employer/ insurer/ plan administrator], should also be paid with your election form, but it need not be paid at this time in order for you to make a valid election of continuation coverage. The premium due for the retroactive period of coverage (from the termination date to the date of your election), if any, must also be paid. Both amounts must be paid within 45 days of the date that you submit your election.

V. Subsequent Monthly Premium Payments

After your election is processed, you will receive monthly bills. Your first monthly bill will reflect any adjustments required to convert your premium payment method to a calendar-month basis.

Even though there is a 45-day grace period applicable to the premium payment for the retroactive period of coverage (see the following discussion of grace periods), it is important that you pay this bill promptly. The premium due date for the retroactive period of coverage is the date that you submit your election form. The premium due date for monthly premiums thereafter is the first day of each month.

VI. Grace Periods

There is no grace period for your application fee. That fee must be included with your election form. A grace period of 45 days is allowed for the premium for the first full month of coverage beginning after the date of your election and for the retroactive period of coverage (from the date that your coverage ended until the date that you submit the election form).

A grace period of 30 days will be allowed for each subsequent monthly premium. This 30-day grace period does not apply to the premium for the first period of coverage beginning with the date of your election.

VII. Declining Coverage

If you do not wish to purchase continuation coverage, you need do nothing. Do not return the election form.

VIII. Electing More Coverage

You may be eligible for more coverage in certain situations. You can apply for a total of 29 or 36 months of coverage, depending on the situation. If you are the spouse or dependent child of the covered employee, you may extend your original 18 months of coverage for a total of up to 36 months of coverage. You may elect this additional coverage if you have a second qualifying event (listed previously) during your original 18 months of coverage.

If you are determined by the Social Security Administration to be disabled at the time of or within 60 days of termination or reduction in hours resulting in loss of group coverage, and if you are willing to pay a higher premium, you can extend your original 18 months of coverage up to a total of 29 months if you notify [plan administrator] both within 60 days of that determination and before the end of the first 18 months of coverage. Likewise, if your dependent children are determined by the Social Security Administration to be disabled, they can extend their coverage up to a total of 29 months if they notify [plan administrator] both within 60 days of that determination and before the end of the first 18 months of coverage. The premiums charged for the coverage will be increased nearly 50 percent during the period of disability.

IX. Your Obligations

In order to properly elect your continuation of health coverage, you must submit your election form along with the application fee within 60 days of the day that you receive this notice.

You must pay your premiums, set forth in the election form and in any subsequent bill, within the applicable grace period. Premiums will be too late if we receive them after the grace period ends (45 days after submission of the election form and application fee in the case of premiums due at the time of your election and 30 days in the case of all other premiums).

If you subsequently encounter another qualifying event, such as a divorce, during your initial 18 months of coverage, you must notify [plan administrator] if you wish to extend your coverage for a total of 36 months.

If you are determined by the Social Security Administration to be disabled at the time of or within 60 days of termination or reduction in hours resulting in loss of group coverage, and you want to extend your coverage up to a total of 29 months, you must notify [plan administrator] both within 60 days of that determination and before the end of the first 18 months of your coverage. You must notify [plan administrator] within 30 days of any final determination that you are no longer disabled.

Likewise, if your dependent children are determined by the Social Security Administration to be disabled at the time of or within 60 days of termination or reduction in hours resulting in loss of group coverage, and they want to extend their coverage up to a total of 29 months, they must notify [plan administrator] both within 60 days of that determination and before the end of the first 18 months of their coverage. Your dependent children must notify [plan administrator] within 30 days of any final determination that they are no longer disabled.

The law requires that you notify [employer/plan administrator] within 60 days of when you become covered under another group health plan. Notice to this effect must be sent to [address to which premium payments are sent].

X. Additional Information

If you have questions concerning your right to purchase continuation coverage, please contact [manager in charge of employee benefits].

In the event that [employer] changes the medical or dental benefits available to similarly situated persons, their spouses, or their dependent children, those changes will be extended on the same basis to persons who have purchased continuation coverage. The cost of the continuation coverage will be adjusted to reflect the change in your continuation coverage benefits.