H&W Plans - SAR for COBRA

[TPApril]

Is it common to send COBRA participants as of prior eoy who no longer have COBRA a copy of the prior year SAR?

One client is resistant.

[Brian Gilmore]

I think this is an area where you'll find a variety of opinions.  I definitely would provide the SAR if the client receives a written request from the former participant to avoid potential $110/day penalties.  Otherwise, I am comfortable excluding those who are not currently in active or COBRA coverage.  This is some mixed guidance here that could be interpreted to support the other side, though.

Here's my take--

https://www.newfront.com/blog/the-summary-annual-report-sar-for-health-plans

What About COBRA Qualified Beneficiaries? 

COBRA qualified beneficiaries have a right to receive the SAR in the same manner as active participants.    

There is an open question as to whether terminated employees who participated in the prior plan year to which the SAR relates, but are not COBRA qualified beneficiaries (e.g., they declined COBRA), are also entitled to receive the SAR.  Our position is that because these former employees are not currently participants (neither active nor COBRA), the plan does not have to provide them with a copy of the SAR.  

• Note: DOL guidance in Advisory Opinion Letter 79-64A provides that in the context of a plan termination, the SAR is required for all participants in the prior plan year regardless of COBRA status.  Some have interpreted this guidance broadly to apply even for a continuing plan.  We feel this is an overly conservative approach and therefore do not have any concern with employers who distribute the SAR only to those terminated employees who have elected COBRA. 

[Peter Gulia]

Recognizing some ambiguities of ERISA § 104(b)(3) or of 29 C.F.R. § 2520.104b-10, I’m curious:

What conventions do designers of software for administering health plans use to set whether a former participant, a former beneficiary, a former alternate recipient, or a former continuee routinely receives a summary annual report on the plan-accounting year in which one was not former?