EXPLANATION OF USE FOR THE MODEL UNAVAILABILITY NOTICE This memorandum is being provided to explain the use of the Model Unavailability Notice which is attached hereto. By way of explanation, on May 26, 2004 the United States Department of Labor issued final rules specifying the required content and timing of notices required by the health care continuation coverage provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). Those final rules require that if a plan administrator receives notice of a qualifying event from a participant who is not eligible to receive COBRA, the administrator must provide notice to any such individual explaining that he or she is not eligible for continuation coverage and explaining why he or she is not eligible for continuation coverage. The attached Model Unavailability Notice has been prepared by Blue Cross & Blue Shield of Mississippi as a courtesy to our customers and should be used by you as the employer or by your Plan Administrator. However, please understand that the attached Model Unavailability Notice is intended to serve only as a guide to assist you in the development of your group’s Model Unavailability Notice. Please remember, if your group is not subject to COBRA then you will not need to utilize this notice. Your Model Unavailability Notice should include the name of the plan and the name, address and telephone number of the party responsible under the plan for administering COBRA benefits, in that connection, it will be necessary for the provided Model Unavailability Notice to be altered to include that information. This Model Unavailability Notice must be sent to the individual who provided notice of a qualifying event within 14 days of the receipt of the notice of qualifying event. This notice must be provided regardless of the basis for the denial and regardless of whether the notice involves a first or second qualifying event or a request for a disability extension. It is also recommended that this Notice of Unavailability be sent to any individual who provides notice of a qualifying event, whether the proposed Model Qualified Beneficiary Notice is utilized by that individual or not. DISCLAIMER - Nothing contained, expressed, or implied in this Explanation of Use for the Model Unavailability Notice or the Model Unavailability Notice attached hereto is intended as, nor shall be construed or understood as, legal advice, guidance, or interpretation. No attorney-client relationship is established between Blue Cross & Blue Shield of Mississippi and you by reason of your use of this Explanation of Use for the Model Unavailability Notice or the Model Unavailability Notice attached hereto under any circumstances whatsoever. The Explanation of Use for the Model Unavailability Notice and the Model Unavailability Notice attached hereto are provided for general information purposes only. If you have questions about any law, statute, regulation, or requirement expressly or implicitly referenced by this Explanation of Use for the Model Unavailability Notice or the Model Unavailability Notice attached hereto, you should contact your own legal counsel. COBRA administration and notice requirements remain the sole responsibility of the employer or Plan Administrator and by the provision of this Explanation of Use for the Model Unavailability Notice and the Model Unavailability Notice attached hereto; Blue Cross & Blue Shield of Mississippi assumes none of that responsibility. BCBS 21201 NOTICE OF UNAVAILABILITY OF CONTINUATION COVERAGE (For use by single-employer group health plans) ** UNAVAILABILITY OF CONTINUATION COVERAGE RIGHTS UNDER COBRA** Introduction You are receiving this notice because you have recently provided notice of what you believed to be a qualifying event as defined by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). It has been determined that you are not entitled to COBRA continuation coverage. This notice generally explains COBRA continuation coverage and why you are not entitled to COBRA continuation coverage. The right to COBRA continuation coverage was created by a federal law, the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). COBRA continuation coverage can become available to you when you would otherwise lose your group health coverage. It can also become available to other members of your family who are covered under the Plan when they would otherwise lose their group health coverage. For additional information about your rights and obligations under the Plan and under federal law, you should review the Plan’s Summary Plan Description or contact the Plan Administrator. What is COBRA Continuation Coverage? COBRA continuation coverage is a continuation of Plan coverage when coverage would otherwise end because of a life event known as a “qualifying event.” Specific qualifying events are listed later in this notice. After a qualifying event, COBRA continuation coverage must be offered to each person who is a “qualified beneficiary.” You, your spouse, and your dependent children could become qualified beneficiaries if coverage under the Plan is lost because of the qualifying event. Under the Plan, qualified beneficiaries who elect COBRA continuation coverage [choose and enter appropriate information: must pay or are not required to pay] for COBRA continuation coverage. If you are an employee, you will become a qualified beneficiary if you lose your coverage under the Plan because either one of the following qualifying events happens: • Your hours of employment are reduced, or • Your employment ends for any reason other than your gross misconduct. If you are the spouse of an employee, you will become a qualified beneficiary if you lose your coverage under the Plan because any of the following qualifying events happens: • Your spouse dies; • Your spouse’s hours of employment are reduced; • Your spouse’s employment ends for any reason other than his or her gross misconduct; • Your spouse becomes entitled to Medicare benefits (under Part A, Part B, or both); or • You become divorced or legally separated from your spouse. BCBS 21201 Your dependent children will become qualified beneficiaries if they lose coverage under the Plan because any of the following qualifying events happens: • The parent-employee dies; • The parent-employee’s hours of employment are reduced; • The parent-employee’s employment ends for any reason other than his or her gross misconduct; • The parent-employee becomes entitled to Medicare benefits (Part A, Part B, or both); • The parents become divorced or legally separated; or • The child stops being eligible for coverage under the plan as a “dependent child.” W T A i P r A Y F d P P a i W Y a c B [If the Plan provides retiree health coverage, add the following paragraph:] Sometimes, filing a proceeding in bankruptcy under title 11 of the United States Code can be a qualifying event. If a proceeding in bankruptcy is filed with respect to [enter name of employer sponsoring the plan], and that bankruptcy results in the loss of coverage of any retired employee covered under the Plan, the retired employee will become a qualified beneficiary with respect to the bankruptcy. The retired employee’s spouse, surviving spouse, and dependent children will also become qualified beneficiaries if bankruptcy results in the loss of their coverage under the Plan. hen is COBRA Coverage Available? he Plan will offer COBRA continuation coverage to qualified beneficiaries only after the Plan dministrator has been notified that a qualifying event has occurred. When the qualifying event s the end of employment or reduction of hours of employment, death of the employee, [add if lan provides retiree health coverage: commencement of a proceeding in bankruptcy with espect to the employer,] or the employee's becoming entitled to Medicare benefits (under Part , Part B, or both), the employer must notify the Plan Administrator of the qualifying event. ou Must Give Notice of Some Qualifying Events or the other qualifying events (divorce or legal separation of the employee and spouse or a ependent child’s losing eligibility for coverage as a dependent child), you must notify the lan Administrator within 60 days [or enter longer period permitted under the terms of the lan] after the qualifying event occurs. You must provide this notice to: [Enter name of ppropriate party]. [Add description of any additional Plan procedures for this notice, ncluding a description of any required information or documentation.] hy COBRA Continuation Coverage is not Available to You. ou have provided notice pursuant to the above section, however, because [provide explanation s to why the individual is not entitled to continuation coverage] you are not eligible for COBRA ontinuation coverage. CBS 21201 2 BCBS 21201 3 If You Have Questions Questions concerning your Plan or your COBRA continuation coverage rights should be addressed to the contact or contacts identified below. For more information about your rights under ERISA, including COBRA, the Health Insurance Portability and Accountability Act (HIPAA), and other laws affecting group health plans, contact the nearest Regional or District Office of the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) in your area or visit the EBSA website at www.dol.gov/ebsa. (Addresses and phone numbers of Regional and District EBSA Offices are available through EBSA’s website.) Keep Your Plan Informed of Address Changes In order to protect your family’s rights, you should keep the Plan Administrator informed of any changes in the addresses of family members. You should also keep a copy, for your records, of any notices you send to the Plan Administrator. Plan Contact Information [Enter name of group health plan and name (or position), address and phone number of party or parties from whom information about the plan and COBRA continuation coverage can be obtained on request.]