Have you thought about your COBRA notices recently? Of course not, because COBRA notices don’t warrant your valuable time. They are just another one of those pesky notices that the law requires you to send. If that was your reaction, you may want to rethink it.
Over the last couple of years, we have seen an increase in the number of lawsuits filed against employers relating to deficient COBRA notices. As a reminder, COBRA is a federal law that applies to any employer that employed at least 20 employees during the prior year calendar and that provides a group health plan, such as a medical, dental or vision plan, to its employees. For this purpose, the “employer” is determined on a controlled group basis. So, for example, two employers with 15 employees each may be subject to COBRA if they have the same parent company. (Note that for small employers who are not subject to the federal COBRA rules, there may be similar state COBRA-like requirements that apply, including notice obligations. Those state rules are not addressed in this article.)
The federal COBRA rules require the plan administrator of a group health plan to provide certain notices to plan participants, both upon initial enrollment in the plan and upon a qualifying event, such as a termination of employment or divorce, if that event results in the loss of health plan coverage or an increase in the premiums being charged to the individual.
The federal COBRA rules also require that such notices contain certain information. The recent spate of lawsuits has attacked employers for failing to ensure that their COBRA notices contained all of the required information, even if that missing information was fairly immaterial. Why would a plaintiff bring such a suit? Courts can assess up to a $110 per day penalty for each deficient COBRA notice per person, and plaintiffs’ law firms can often get their fees paid. You now understand why plaintiffs (or more accurately, plaintiffs’ law firms) have an interest in scouring your COBRA notices for deficiencies.
Fortunately, employers don’t have to go it alone in determining how to comply with COBRA notice requirements. The Department of Labor has issued model COBRA notices, which are available on its website. To mitigate your risk of a lawsuit, we recommend that these model notices be used in their entirety. Some courts, when assessing the merits of a lawsuit, have referred to the Department of Labor’s model notice as a resource to judge whether the court felt the employer met its notice obligations. If you want to supplement that model notice because you feel additional information would be helpful to participants, you can still do so, as long as you ensure that your “helpful” additions don’t end up making things more confusing to participants.
So, if you have not recently reviewed the content of your COBRA notices, now would be a good time to do so. And, even if you use a COBRA vendor to supply the notices on your behalf, it would be prudent to “check their work.”