IMPORTANT NOTICE REGARDING YOUR COBRA COVERAGE:

CHANGES MADE BY 1996 FEDERAL LEGISLATION

The Health Insurance Portability and Accountability Act (HIPAA) was signed by President Clinton on August 21, 1996. The Act makes a number of changes to COBRA coverage (and other employee benefits). This Notice summarizes COBRA changes.

1. Disability extension.
        As of January 1, 1997, if you receive a determination from the Social Security Administration that you were disabled at any time during the first 60 days of COBRA continuation coverage, you are eligible to continue COBRA for a total of 29 months, rather than only 18 months. To receive this 11-month extension, you must notify the plan administrator during the first 18 months of COBRA coverage that you have received a Social Security disability determination.
        Under prior law, you had to receive a Social Security determination that you were disabled at the time of the qualifying event to be eligible for the 11-month extension. The new law also clarifies that both employees and dependents who are disabled are eligible for the 11-month extension.
2. Newborn or adopted children.
        As of January 1, 1997, if you are a former employee and you have a newborn or adopted child while you are on COBRA continuation and you enroll the new child for coverage, the new child will be considered a qualified beneficiary rather than merely an after-acquired dependent. This gives the child additional rights, such as the right to continue COBRA benefits even if you die during the COBRA period, and the right to an additional 18 months of coverage if a second qualifying event occurs during the initial 18-month COBRA period following your termination or retirement.
3. Limits on Pre-existing Conditions Exclusions; Certifications of Coverage
        If you have, or are eligible for, COBRA coverage under this plan and you also obtain coverage under another group health plan which contains pre-existing condition exclusion that applies to you, you can continue COBRA coverage under our plan until the earlier of the date the exclusions no longer apply or the date your COBRA coverage would otherwise end. For plan years beginning on or after July 1, 1997, health plans cannot impose a pre-existing conditions limitation of more than 12 months (18 months for late enrollees), and plans must offset any pre-existing conditions limitations period by prior creditable coverage so long as coverage has not lapsed for 63 days or longer. If you change jobs, you will need to present a certification to your new employer, specifying the period of time for which for which you had creditable coverage under our group health plan and under COBRA. The new law requires us (or the insurer) to provide you with certifications at the beginning and end of your COBRA coverage, and again within 24 months if you request it. These new changes in the law will probably limit the circumstances under which you can continue COBRA coverage.
4. Medicare followed by subsequent qualifying event.
        The new law clarifies that when an employee becomes entitled to Medicare and, within the next 18 months, subsequently terminates employment or reduces hours, the employees dependents are entitled only to 36 months of COBRA coverage, not to 54 (36+18) months of COBRA coverage. This provision is retroactive to plan years beginning in 1990 (the effective date of the 1989 Medicare entitlement amendments).