1. FEATURE STORY:
COBRA NOTIFICATION REQUIREMENTS MUST BE TAKEN SERIOUSLY
In a termination situation, employers are legally required to furnish ex-employees timely notice of their rights to health care continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA).
More specifically, employers must notify plan administrators within 30 days after an employee's termination (as long as the termination was for reasons other than gross misconduct). Within 14 days after receiving notice from the employer, the plan administrator must then provide written notice to individuals qualified to elect COBRA. Any employer acting as its own plan administrator has 44 days to provide COBRA election notice to qualified individuals.
Don't Drop The Ball
Small businesses that don't use outside plan administrators may be particularly vulnerable to missing COBRA notification deadlines and subsequently getting penalized by a court.
Example: A nurse was diagnosed with breast cancer, but was still able to work while undergoing chemotherapy. A few months later, her employer terminated her with an offhand suggestion that she "should go to Social Security and get disability." The employer promised to let her remain on its group health insurance plan for two more months.
However, about a month later, she was informed that her medical coverage had already been cancelled. When she asked her former employer for a COBRA election form, the employer did not respond. Months later, she again asked for an election form, and the employer claimed it had sent it 15 days after her termination. During this time, the employer also ignored a Department of Labor inquiry (never a smart move!). Eventually, the employer did send an election notice — but not only was it mailed 10 months after the termination, it also contained incorrect information.
The ex-employee sued and won nearly $68,000, including $37,180 in daily notice failure penalties. (Doss-Clark v. Babies and Beyond Pediatrics, P.A., M.D.FL, No. 8:06-CV-1760, 2007)
"It's In The Mail…Really!"
COBRA notices are typically sent by first-class mail, which then begs the question: When mailing a COBRA election notice, must you be able to prove that the notice was actually received by the intended recipient, or just that you did, in fact, mail the notice to that individual?
In general, plan administrators should be able to prove that they made a good-faith effort to furnish a COBRA election notice to an employee or other qualified individual. Plan administrators generally have no duty to ensure that the intended recipient actually receives the notice.
For one company, evidence of a good-faith effort to provide notice came in the form of computer printouts that: 1) showed the date the notice was mailed to the employee; 2) confirmed that the notice was sent to the employee's last known address; and 3) documented that the notice had not been returned as undeliverable. (Farrell v. AstraZeneca Pharmaceuticals LP, D.C. DE, No. 04-285-KAJ, 2005)
Tip: When mailing a COBRA election notice, go the extra mile to protect yourself by including an "Acknowledgment of Receipt of COBRA Notice" form; have the recipient sign it and return it to you immediately upon receipt.
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