COBRA Unavailability of Continuation Notice

Sent when a reported qualifying event does not entitle someone to elect COBRA, explaining why and meeting the same strict deadline as an election notice.

See the Step-by-Step ProcessView Model Notice
Worth knowing before you start: This notice goes out when COBRA is not available, but the determination of why it isn't available is where the real risk lies. If you get that determination wrong and send this notice instead of an election notice, you may have denied someone continuation coverage they were entitled to. When the eligibility question is anything less than clear-cut, confirm with your TPA or ERISA counsel before sending.

Prefer not to do it yourself? ABY can help.

Administering COBRA means multiple required notices, strict deadlines, and real penalties if something is missed, so many employers hand it to a third-party administrator. ABY can take COBRA administration off your plate.

Get a Quote
What Written notice that COBRA continuation coverage is not available after a reported qualifying event, stating the reason.
Who Employers with 20+ employees sponsoring a group health plan; the plan administrator sends the notice to any employee, spouse, or dependent who reported an event that does not entitle them to COBRA.
When As soon as practicable, by the same deadline that would have applied to a COBRA Election Notice (generally within 14 to 44 days of the reported event, depending on who is the plan administrator).
Risk IRS excise tax of $100 per day per qualified beneficiary under IRC §4980B ($200/day for multiple family members from the same event), plus up to $110 per day per beneficiary in court-assessed ERISA §502(c)(1) penalties. The greater risk, however, is sending this notice in error, wrongly denying COBRA rights that should have been offered.
Trigger Timing Who Sends Notes
Plan administrator determines COBRA is not available following a reported qualifying event As soon as practicable; no later than the Election Notice deadline (14 days from receiving notice of the event, or 44 days if employer is plan administrator) Plan administrator (employer or TPA) Send separately to each affected individual; employee, spouse, and dependents each have independent rights.
Trigger: Administrator determines COBRA is not available after a reported event
Timing: By the Election Notice deadline (14 days, or 44 if employer-administered)
Who sends: Plan administrator (employer or TPA)
Notes: Send separately to each affected individual.
  • The reported qualifying event: what was reported, who reported it, and when.
  • Documentation supporting the determination that COBRA is not available (such as no actual loss of coverage, event predates coverage, individual is not a qualified beneficiary).
  • Names and last known mailing addresses of each affected individual.
  • Plan name and plan administrator contact information.
  • The notice template; see the Model Notice section below.
1
Review eligibility carefullyConfirm why COBRA does not apply: is this a qualifying event? Was the individual covered under the plan on the event date? Is there an actual loss of coverage? If any of these are unclear, confirm with your TPA or ERISA counsel before proceeding.
2
Document the determinationNote the specific reason COBRA is not available and retain the supporting evidence.
3
Prepare the noticeUse the template in the Model Notice section below; state the reason plainly and include plan administrator contact information.
4
Send to each affected individualMail separately to the employee, spouse, and any dependents at their last known addresses.
5
Send promptlyUse first-class mail with a Certificate of Mailing (USPS Form 3817) for a dated proof of mailing.
6
Log and retainKeep copies and your mailing log with your COBRA event records.
  • Who receives it: Each affected individual at their last known mailing address; employee, spouse, and dependents separately.
  • Method: First-class mail to the last known address is the legal standard and creates a presumption of receipt under ERISA.
  • Proof of mailing: A Certificate of Mailing (USPS Form 3817), available at the post office, provides a dated, stamped record of when you deposited the notice, without the complications of certified mail.
  • Electronic delivery: Permitted only if the DOL's ERISA electronic disclosure safe harbor rules are met.
  • Presentation: Send as a stand-alone notice; do not bundle inside unrelated plan communications.
  • Notice copiesCopy of each unavailability notice as sent, including the stated reason for ineligibility.
  • Determination supportDocumentation supporting the eligibility determination (event details, coverage records, and so on).
  • Mailing logDate, method, and recipient name and address for each notice sent.
  • Retention periodRetain all COBRA records for at least 6 years per ERISA's general recordkeeping standard.

Common traps

Skipping the notice because COBRA isn't available: You must still notify in writing, by the election notice deadline.
Sending this notice when an election notice was owed: The bigger risk is wrongly denying COBRA rights, not the paperwork itself.
Missing spouses or dependents: Each is entitled to their own notice and independent COBRA rights.
Vague language about why COBRA isn't available: The notice must state a clear, specific reason.

FAQs

What is the Unavailability Notice?
A written notice sent to individuals who reported a qualifying event but are determined not to be entitled to elect COBRA continuation coverage, explaining the reason COBRA is not available.

Who must receive it?
Each individual who reported the event and is determined not to be entitled to COBRA, including the employee, spouse, and dependents, each treated as a separate beneficiary.

What are the most common reasons COBRA isn't available?
The reported event is not a COBRA qualifying event; the individual was not covered under the plan on the date of the event; there was no actual loss of coverage; or the individual is not a qualified beneficiary under the plan.

What are the penalties for failing to send the notice?
IRS excise tax of $100 per day per qualified beneficiary under IRC §4980B ($200/day for multiple family members from the same event), plus up to $110 per day per beneficiary in court-assessed ERISA §502(c)(1) penalties. The more significant risk is a finding that COBRA was wrongly denied, which could result in retroactive coverage obligations and litigation.

  • Mini-COBRA: If you're below the federal 20-employee threshold, your state's continuation-coverage law may apply and could carry its own unavailability requirements. See the State Continuation Election Notice page.
  • Disputed determinations: If an individual disagrees with your determination that COBRA is unavailable, document your reasoning thoroughly. A well-documented eligibility review is your best protection in a dispute.
  • Multiple EINs / controlled groups: Clearly identify the plan sponsor and plan administrator in the notice, particularly in related-entity situations.

The DOL does not provide an official model template for this notice. Use the language below; fill in the bracketed fields and select the applicable reason.

NOTICE OF UNAVAILABILITY OF COBRA CONTINUATION COVERAGE

Date: [Date of Notice]

To: [Beneficiary Name]
[Mailing Address]

You recently notified us of an event that you believed might entitle you or a family member to elect COBRA continuation coverage under [PLAN NAME].

After reviewing the information provided, we have determined that COBRA continuation coverage is not available for the following reason:

  • The event you reported does not qualify as a COBRA qualifying event under federal law
  • The affected individual was not covered under the plan on the date of the reported event
  • There was no actual loss of coverage resulting from the reported event
  • The affected individual is not a qualified beneficiary under the plan
  • [Other, state the specific reason plainly]

If you believe this determination is incorrect or if you have additional information that may affect this decision, please contact us promptly:

[PLAN ADMINISTRATOR NAME / HR DEPARTMENT]
[Mailing Address]
[Phone Number]
[Email Address]

This notice is provided pursuant to 29 CFR § 2590.606-4.