Nobody’s perfect, so mistakes are bound to happen from time to time. Unfortunately, when it comes to COBRA notices, a little human error can lead to major costs. Recent class action lawsuits are proving just how much attention to detail matters when sending COBRA notices.
COBRA Notice Requirements
Employers who are covered by COBRA regulations must offer continuing health insurance after coverage would otherwise be terminated due to a qualifying event. While many employers may understand the gist of these regulations, they may not realize how important COBRA notices are.
People can’t exercise their right to continued coverage if they don’t know that the right exists. This is where COBRA notices come in. The federal law establishes clear requirements – and penalties – for COBRA notices.
According to the Department of Labor, required notices include the general notice, the notice of qualifying event and the COBRA election notice. These notices must be sent out within a specified timeframe, and they must include key details. For example, the DOL says that the election notice must include the following:
- The name of the plan
- The name, address and telephone number of the plan’s COBRA administrator
- The qualifying event
- The qualified beneficiaries
- An explanation of the right to elect continuation coverage
- When coverage will be terminated if continuation coverage is not elected
- How to elect continuation coverage
- What will happen if continuation coverage is not elected
- What continuation coverage is available
- How long continuation coverage is available and how it can be extended
- How continuation coverage could be terminated early
- Premium payment requirements, which must include the due dates and grace periods
- The importance of keeping the administrator informed of any address changes
- A statement that the election notice does fully describe COBRA or the plan, and that the plan administrator or the summary plan description can provide more information
It’s a lot to cover, but it’s all necessary. The penalty for non-compliance can be $110 per day. With enough people, and over a long enough period of time, that fee can really add up.
The Lawsuits Are Mounting
Recently, multiple lawsuits have targeted employers over claims that the COBRA notices were inadequate.
Bloomberg Law has reported at least three separate cases involving COBRA notices in recent months. Lockheed Martin has agreed to pay $1.25 million in a class action lawsuit claiming that the company failed to send compliant COBRA notices. Marriott has agreed to pay $250,000 in a class action lawsuit over English-only notices. Another proposed class action lawsuit targets Lowe’s over non-compliant COBRA notices.
According to Tampa Bay Times, a Florida couple wants a class-action lawsuit against Target. The couple alleges that, while the retailer did send notices, the notices were missing clear instructions.
Consider Yourself Warned
While much of recent litigation has been centered in Florida, it’s important to note that the lawsuits involve federal requirements. Employers in all states should pay attention.
These lawsuits should serve as a warning. The DOL provides model notices that employers can use for guidance. Check your COBRA notices for compliance right away.
The Travisoft COBRA administration system is pre-loaded with compliant notice templates that you can easily customize to meet your needs or your clients’ needs. Learn more about how Travisoft automation keeps TPAs and employers compliant.