When an employee leaves a business, they have an opportunity to extend their insurance coverage by taking advantage of the Consolidated Omnibus Budget Reconciliation Act (COBRA). At the time of their departure, employers are required to give notice, a fairly standard process, that the departing employee is eligible for COBRA coverage, what it would cost, and how to sign up for this coverage. Recently in Florida, however, three class action lawsuits have been filed which allege that the employer’s COBRA notice did not comply with regulations.
COBRA and ERISA Regulations
COBRA regulations were formed as an amendment to ERISA and apply to businesses that have at least 20 employees and who provide those employees with a group health plan benefit. COBRA regulations require the plan administrator to provide specific notices at different times throughout the plan year and throughout an individual’s tenure with the business. This includes notices when someone is first employed, when they leave employment, if they are divorced, or when another event occurs where there is a loss of coverage or a premium increase. These notices are specifically designed to be understandable to employees and inform them about rights and costs.
COBRA Notice Lawsuits
In one of these cases, a spouse of an individual who is no longer an employee with the plan sponsor alleges that they did not receive appropriate notice under COBRA. They were not aware of the termination date for the health care plan they were currently covered under, nor were they aware of the plan administrator’s contact information, including how they could register for and send in COBRA payments.
The lawsuit certified as a class consisting of all plan participants in order to get statutory penalties that are collected for each participant and beneficiary in the class. Statutory penalties of $110 apply to each situation where notice requirements are not met.
The other cases concern similar violations of Department of Labor regulations around COBRA practices. Two of the three Florida cases are still pending while the third settled.
Complying with COBRA
COBRA notice requirements are straightforward, and the Department of Labor has model notices that employers can use when drafting their own notices. In addition to putting together appropriate notices, businesses must put in place the processes to send out notices in a timely fashion and track contact information for participants and beneficiaries so they can reach those individuals when needed.
These cases highlight the importance of compliance with COBRA notice requirements. If your business needs help putting in place documents or procedures for COBRA or other ERISA required notices, the team of experienced, responsive employee benefits attorneys at Hall Benefits Law can help. To learn more, call 678-439-6236 today or visit the Hall Benefits Law website.
Hall Benefits Law, LLC
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