Employers need to be alert to  recent legislation which will soon require a change in COBRA notices and procedures.  The Trade Act of 2002 was signed into law on August 6, 2002, and amended federal COBRA requirements by adding a new “second chance” COBRA election for individuals who become eligible for trade adjustment assistance as a result of a trade assistance petition filed on or after November 4, 2002.  Trade adjustment assistance is federal aid which is available for workers displaced by increased imports of competing products from foreign countries. 

Under the new law, individuals are entitled to a second 60-day COBRA election period if they 1) become eligible for trade adjustment assistance (as certified by the government under the 1974 Trade Act); 2) lost their group health plan coverage because of a job loss that resulted in eligibility for trade adjustment assistance; and 3) did not elect COBRA during their initial COBRA election period.

The new COBRA election period begins on the first day of the month in which the individual becomes certified for trade assistance, but the election must be exercised within six months of the initial loss of coverage.  Although it is not entirely clear from the law, it appears that the COBRA coverage period (i.e., 18, 29, or 36 months) begins with the initial loss of coverage, so the “second chance” election does not increase the total period of time the individual receives COBRA coverage.  In addition, there is no retroactive coverage back to the initial loss of coverage.