SUMMARY PLAN DESCRIPTION ADDENDUM
CONTINUATION COVERAGE RIGHTS UNDER COBRA
FEBRUARY 9, 2005
Under federal law, the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), certain
Employees and their families covered under the TFE, Inc. Cafeteria Plan (the
Plan) will be entitled to the opportunity to elect a temporary extension of
health coverage (called "COBRA continuation coverage") where coverage
under the Plan would otherwise end. The following is intended to inform Plan
Participants and beneficiaries, in summary fashion, of their rights and
obligations under the continuation coverage provisions of COBRA, as amended and
reflected in final and proposed regulations published by the Department of the
Treasury. The following is intended to reflect the law and does not grant or
take away any rights under the law.
The Plan Administrator is
TFE, Inc. The Plan Administrator is responsible for administering COBRA
continuation coverage. Complete instructions on COBRA, as well as election
forms and other information, will be provided by the Plan Administrator or its
designee to Plan Participants who become Qualified Beneficiaries under COBRA.
What is COBRA continuation
coverage? COBRA continuation coverage
is the temporary extension of group health plan coverage that must be offered
to certain Plan Participants and their eligible family members (called
"Qualified Beneficiaries") at group rates. The right to COBRA
continuation coverage is triggered by the occurrence of a life event that
results in the loss of coverage under the terms of the Plan (the
"Qualifying Event"). The coverage must be identical to the Plan
coverage that the Qualified Beneficiary had immediately before the Qualifying
Event, or if the coverage has been changed, the coverage must be identical to
the coverage provided to similarly situated active Employees who have not
experienced a Qualifying Event (in other words, similarly situated non-COBRA
beneficiaries).
Who can become a Qualified
Beneficiary? In general, a Qualified
Beneficiary
can be:
(i)
Any individual who,
on the day before a Qualifying Event, is covered under a Plan by virtue of
being on that day either a covered Employee, the Spouse of a covered Employee,
or a Dependent child of a covered Employee. If, however, an individual is denied
or not offered coverage under the Plan under circumstances in which the denial
or failure to offer constitutes a violation of applicable law, then the
individual will be considered to have had the Plan coverage and will be
considered a Qualified Beneficiary if that individual experiences a Qualifying
Event.
(ii) Any child who is born to or placed for adoption with a
covered Employee during a period of COBRA continuation coverage, and any
individual who is covered by the Plan as an alternate recipient under a
qualified medical support order. If, however, an individual is denied or not
offered coverage under the Plan under circumstances in which the denial or
failure to offer constitutes a violation of applicable law, then the individual
will be considered to have had the Plan coverage and will be considered a
Qualified Beneficiary if that individual experiences a Qualifying Event.
The term "covered
Employee" includes not only common‑law Employees (whether part‑time
or full‑time) but also any individual who is provided coverage under the
Plan due to his or her performance of services for the employer sponsoring the
Plan (e.g., self‑employed individuals, independent contractor, or
corporate director).
An individual is not a
Qualified Beneficiary if the individual's status as a covered Employee is
attributable to a period in which the individual was a nonresident alien who
received from the individual's Employer no earned income that constituted
income from sources within the United States. If, on account of the preceding
reason, an individual is not a Qualified Beneficiary, then a Spouse or
Dependent child of the individual will also not be considered a Qualified
Beneficiary by virtue of the relationship to the individual. A domestic partner
is not a Qualified Beneficiary.
Each Qualified Beneficiary
(including a child who is born to or placed for adoption with a covered
Employee during a period of COBRA continuation coverage) must be offered the
opportunity to make an independent election to receive COBRA continuation
coverage.
What is a Qualifying
Event? A Qualifying Event is any of
the following if the Plan provided that the Plan participant would lose
coverage (i.e., cease to be covered under the same terms and conditions as in
effect immediately before the Qualifying Event) in the absence of COBRA
continuation coverage:
(i) The death of a covered Employee.
(ii) The termination (other than by reason of the
Employee's gross misconduct), or reduction of hours, of a covered Employee's
employment.
(iii) The divorce or legal separation of a covered Employee
from the Employee's Spouse.
(iv) A covered Employee's enrollment in any part of the
Medicare program.
(v) A Dependent child's ceasing to satisfy the Plan's
requirements for a Dependent child (for example, attainment of the maximum age
for dependency under the Plan).
If the Qualifying Event
causes the covered Employee, or the covered Spouse or a Dependent child of the
covered Employee, to cease to be covered under the Plan under the same terms
and conditions as in effect immediately before the Qualifying Event (or in the
case of the bankruptcy of the Employer, any substantial elimination of coverage
under the Plan occurring within 12-months before or after the date the
bankruptcy proceeding commences), the persons losing such coverage become
Qualified Beneficiaries under COBRA if all the other conditions of the COBRA
are also met. For example, any increase in contribution that must be paid by a
covered Employee, or the Spouse, or a Dependent child of the covered Employee,
for coverage under the Plan that results from the occurrence of one of the
events listed above is a loss of coverage.
The taking of leave under the
Family and Medical Leave Act of 1993 ("FMLA") does not constitute a
Qualifying Event. A Qualifying Event will occur, however, if an Employee does
not return to employment at the end of the FMLA leave and all other COBRA
continuation coverage conditions are present. If a Qualifying Event occurs, it
occurs on the last day of FMLA leave and the applicable maximum coverage period
is measured from this date (unless coverage is lost at a later date and the
Plan provides for the extension of the required periods, in which case the
maximum coverage date is measured from the date when the coverage is lost).
Note: that the covered Employee and family members will be entitled to COBRA
continuation coverage even if they failed to pay the Employee portion of
premiums for coverage under the Plan during the
FMLA leave.
What is the procedure for
obtaining COBRA continuation coverage? The
Plan has conditioned the availability of COBRA continuation coverage upon
the timely election of such coverage. An election is timely if it is made
during the election period.
What is the election
period and how long must it last? The election period is the time period
within which the Qualified Beneficiary can elect COBRA continuation coverage
under the Plan. The election period must begin not later than the date the
Qualified Beneficiary would lose coverage on account of the Qualifying Event
and must not end before the date that is 60 days after the later of the date
the Qualified Beneficiary would lose coverage on account of the Qualifying
Event or the date notice is provided to the Qualified Beneficiary of her or his
right to elect COBRA continuation coverage.
Note: If a covered Employee who has been terminated or experienced
a reduction of hours qualifies for a trade readjustment allowance or
alternative trade adjustment assistance under a federal law called the Trade
Act of 2002, and the Employee and his or her covered dependents have not
elected COBRA coverage within the normal election period, a second opportunity
to elect COBRA coverage will be made available for themselves and certain
family members, but only within a limited period of 60 days or less and only
during the six months immediately after their group health plan coverage ended.
Any person who qualifies or thinks that he and/or his family members may
qualify for assistance under this special provision should contact the Plan
Administrator for further information.
Is a covered Employee or
Qualified Beneficiary responsible for informing the Plan Administrator of the
occurrence of a Qualifying Event?
The Plan
will offer COBRA continuation coverage to qualified beneficiaries only after
the Plan Administrator or its designee has been timely notified that a Qualifying Event
has occurred. The employer (if the employer is not
the Plan Administrator) will notify the Plan Administrator of the Qualifying
Event within 30 days
following the date
coverage ends when
the Qualifying Event is:
·
the
end of employment or reduction of hours of employment,
·
death
of the Employee,
·
commencement of a proceeding in bankruptcy with respect
to the employer, or
·
enrollment
of the Employee in any part of Medicare.
IMPORTANT:
For the other Qualifying
Events (divorce or legal separation of the Employee and spouse or a dependent
child's losing eligibility for coverage as a dependent child), you or someone
on your behalf must notify the Plan Administrator or its
designee in writing within 60 days after the Qualifying
Event occurs, using the procedures specified below. If
these procedures are not followed or if the notice is not provided in
writing to the Plan Administrator or its designee during the 60-day notice
period, any spouse or dependent child who loses coverage will not be offered
the option to elect continuation coverage. You must send this
notice to TFE, Inc.
|
NOTICE PROCEDURES: Any notice that you
provide must be in writing. Oral notice, including
notice by telephone, is not acceptable. You must mail, fax or hand-deliver
your notice to the person, department
or firm listed below, at the following address: Marla Pearson TFE,
Inc. 5220
Woodside Executive Court Aiken,
South Carolina 29803 If mailed, your notice
must be postmarked no later than the last day of the required notice period.
Any notice you provide must state:
If
the qualifying event is a divorce or legal separation, your
notice must include a copy of the divorce decree or the legal
separation agreement. Be
aware that there are other notice requirements in other contexts, for
example, in the case of the disability extension. |
Once the Plan Administrator or its designee receives timely
notice that a Qualifying Event has occurred, COBRA continuation
coverage will be offered to each of the Qualified Beneficiaries.
Each Qualified Beneficiary will have an independent right
to elect COBRA continuation coverage. Covered Employees may elect COBRA
continuation coverage for their spouses, and parents may elect COBRA
continuation coverage on behalf of their children. For each Qualified
Beneficiary who elects COBRA continuation coverage, COBRA continuation coverage
will begin on the date of the Qualifying
Event. If
you or your spouse or dependent children do not elect continuation coverage
within the 60-day election period described above, the right to elect
continuation coverage will be lost.
Is a waiver before the end
of the election period effective to end a Qualified Beneficiary's election
rights? If, during the election
period, a Qualified Beneficiary waives COBRA continuation coverage, the waiver
can be revoked at any time before the end of the election period. Revocation of
the waiver is an election of COBRA continuation coverage. However, if a waiver
is later revoked, coverage need not be provided retroactively (that is, from
the date of the loss of coverage until the waiver is revoked). Waivers and
revocations of waivers are considered made on the date they are sent to the Plan
Administrator or its designee, as applicable.
When may a Qualified
Beneficiary's COBRA continuation coverage be terminated? During the election period, a Qualified Beneficiary
may waive COBRA continuation coverage. Except for an interruption of coverage
in connection with a waiver, COBRA continuation coverage that has been elected
for a Qualified Beneficiary must extend for at least the period beginning on
the date of the Qualifying Event and ending not before the earliest of the
following dates:
(i) The last day of the applicable maximum coverage
period.
(ii) The first day for which Timely Payment is not made to
the Plan with respect to the Qualified Beneficiary.
(iii) The date upon which the Employer ceases to provide any
group health plan (including a successor plan) to any Employee.
(iv) The date, after the date of the election, that the
Qualified Beneficiary first becomes covered under any other Plan that does not
contain any exclusion or limitation with respect to any pre‑existing
condition, other than such an exclusion or limitation that does not apply to,
or is satisfied by, the Qualified Beneficiary.
(v) The date, after the date of the election that the
Qualified Beneficiary first enrolls in the Medicare program (either part A or
part B, whichever occurs earlier).
(vi) In the case of a Qualified Beneficiary entitled to a
disability extension, the later of:
(a) 29-months after the date of the Qualifying Event, or
(ii) the first day of the month that is more than 30 days after the date of a final
determination under Title II or XVI of the Social Security Act that the
disabled Qualified Beneficiary whose disability resulted in the Qualified
Beneficiary's entitlement to the disability extension is no longer disabled,
whichever is earlier; or
(b) the end of the maximum coverage period that applies to
the Qualified Beneficiary without regard to the disability extension.
The Plan can terminate for
cause the coverage of a Qualified Beneficiary on the same basis that the Plan
terminates for cause the coverage of similarly situated non-COBRA
beneficiaries, for example, for the submission of a fraudulent claim.
In the case of an individual
who is not a Qualified Beneficiary and who is receiving coverage under the Plan
solely because of the individual's relationship to a Qualified Beneficiary, if
the Plan's obligation to make COBRA continuation coverage available to the
Qualified Beneficiary ceases, the Plan is not obligated to make coverage
available to the individual who is not a Qualified Beneficiary.
What are the maximum
coverage periods for COBRA continuation coverage? The maximum coverage periods are based on the type of
the Qualifying Event and the status of the Qualified Beneficiary, as shown
below.
(i) In the case of a Qualifying Event that is a
termination of employment or reduction of hours of employment, the maximum
coverage period ends 18-months after the Qualifying Event, if there is not a
disability extension, and 29-months after the Qualifying Event, if there is a
disability extension.
(ii) In the case of a covered Employee's enrollment in the
Medicare program before experiencing a Qualifying Event that is a termination
of employment or reduction of hours of employment, the maximum coverage period
for Qualified Beneficiaries other than the covered Employee ends on the later
of:
(a) 36-months after the date the covered Employee becomes
enrolled in the Medicare program; or
(b) 18-months (or 29-months, if there is a disability
extension) after the date of the covered Employee's termination of employment
or reduction of hours
of employment.
(iii) In
the case of a Qualified Beneficiary who is a child born to or placed for
adoption with a covered Employee during a period of COBRA continuation
coverage, the maximum coverage period is the maximum coverage period applicable
to the Qualifying Event giving rise to the period of COBRA continuation
coverage during which the child was born or placed for adoption.
(iv) In the case of any other Qualifying Event than that
described above, the maximum coverage period ends 36-months after the
Qualifying Event.
Under what circumstances
can the maximum coverage period be expanded? If a Qualifying Event that gives rise to an 18-month or 29-month
maximum coverage period is followed, within that 18- or 29-month period, by a
second Qualifying Event that gives rise to a 36-months maximum coverage period,
the original period is expanded to 36-months, but only for individuals who are
Qualified Beneficiaries at the time of both Qualifying Events. In no circumstance
can the COBRA maximum coverage period be expanded to more than 36-months after
the date of the first Qualifying Event. The Plan Administrator must be notified
of the second Qualifying Event within 60 days of the second Qualifying Event.
This notice must be sent to Marla Pearson, TFE, Inc., 5220 Woodside Executive
Court, Aiken, South Carolina, 29803.
How
does a Qualified Beneficiary become entitled to a disability extension? A disability
extension will be granted if an individual (whether or not the covered
Employee) who is a Qualified Beneficiary in connection with the Qualifying
Event that is a termination or reduction of hours of a covered Employee's
employment, is determined under Title II or XVI of the Social Security Act to
have been disabled at any time during the first 60 days of COBRA continuation
coverage. To qualify for the disability extension, the Qualified Beneficiary
must also provide the Plan Administrator with notice of the disability
determination on a date that is both within 60 days after the date of the
determination and before the end of the original 18-month maximum coverage.
This notice should be sent to Marla Pearson, TFE, Inc., 5220
Woodside Executive Court, Aiken, South Carolina, 29803.
Does the Plan require
payment for COBRA continuation coverage?
For any period of COBRA continuation coverage under the Plan, qualified
beneficiaries who elect COBRA continuation coverage must pay for COBRA
continuation coverage. Qualified beneficiaries will pay up to 102% of the
applicable premium and up to 150% of the applicable premium for any expanded
period of COBRA continuation coverage covering a disabled Qualified Beneficiary
due to a disability extension. The Plan will terminate a Qualified
Beneficiary's COBRA continuation coverage as of the first day of any period for
which timely payment is not made.
Must
the Plan allow payment for COBRA continuation coverage to be made in monthly
installments? Yes. The Plan is also
permitted to allow for payment at
other intervals.
What is Timely Payment for
payment for COBRA continuation coverage?
Timely Payment means a payment made no later than 30 days after the first day
of the coverage period. Payment that is made to the Plan by a later date is
also considered Timely Payment if either under the terms of the Plan, covered
Employees or Qualified Beneficiaries are allowed until that later date to pay
for their coverage for the period or under the terms of an arrangement between
the Employer and the entity that provides Plan benefits on the Employer's behalf,
the Employer is allowed until that later date to pay for coverage of similarly
situated non-COBRA beneficiaries for the period.
Notwithstanding
the above paragraph, the Plan does not require payment for any period of COBRA
continuation coverage for a Qualified Beneficiary earlier than 45 days after
the date on which the election of COBRA continuation coverage is made for that
Qualified Beneficiary. Payment is considered made on the date on which it is
postmarked to the Plan.
If Timely Payment is made to
the Plan in an amount that is not significantly less than the amount the Plan
requires to be paid for a period of coverage, then the amount paid will be
deemed to satisfy the Plan's requirement for the amount to be paid, unless the
Plan notifies the Qualified Beneficiary of the amount of the deficiency and
grants a reasonable period of time for payment of the deficiency to be made. A
"reasonable period of time" is 30 days after the notice is provided.
A shortfall in a Timely Payment is not significant if it is no greater than the
lesser of $50 or 10% of the required amount.
Must
a Qualified Beneficiary be given the right to enroll in a conversion health
plan at the end of the maximum coverage period for COBRA continuation coverage? If a Qualified Beneficiary's COBRA continuation
coverage under a group health plan ends as a result of the expiration of the
applicable maximum coverage period, the Plan will, during the 180‑ day
period that ends on that expiration date, provide the Qualified Beneficiary
with the option of enrolling under a conversion health plan if such an option
is otherwise generally available to similarly situated non-COBRA beneficiaries
under the Plan. If such a conversion option is not otherwise generally
available, it need not be made available to Qualified Beneficiaries.
If you have questions about
your COBRA continuation coverage, you should contact TFE, Inc. or you may
contact the nearest Regional or District Office of the U.S. Department of
Labor's Employee Benefits Security Administration (EBSA). Addresses and phone
numbers of Regional and District EBSA Offices are available through EBSA's Web
site at www.dol.gov/ebsa.
KEEP YOUR PLAN ADMINISTRATOR 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.