Under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), group health plans sponsored by employers with 20 or more employees are generally required to offer employees and their families a temporary extension of health coverage under certain circumstances (e.g, job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events). COBRA litigation has typically been uncommon in the past, but this is beginning to change in the age of COVID-19. With unprecedented numbers of employees losing their jobs, COBRA has become more important than ever, and a growing number of cases have been filed against employers for failing to give proper notice under COBRA.
As a result of their employers’ failures, former employees are seeking to recover statutory penalties and other damages. Under the Act, statutory penalties can add up to more than $40,000 per person per year. If a class action is brought against an employer for COBRA notice deficiencies, these penalties can add up and pose a serious problem. It is therefore no surprise that several of these COBRA lawsuits have settled early in the process. Several other COBRA lawsuits have survived the employers’ motions to dismiss, which indicates that employers should take this issue seriously.
To help protect themselves, employers should review their COBRA notice forms. The Department of Labor has issued an updated model notice form which employers should consult. In general, COBRA notices should include:
- The name of the health plan and the name, address, and telephone number of someone the employee can contact for more information;
- A general description of the continuation coverage provided under the plan;
- An explanation of what qualified beneficiaries must do to notify the plan of qualifying events or disabilities;
- An explanation of the importance of keeping the plan administrator informed of addresses of the participants and beneficiaries; and
- A statement that the general notice does not fully describe COBRA or the plan, and that more information is available from the plan administrator and in the summary plan description.
Employers should consult with an attorney to ensure they are compliant with COBRA. If you have any questions about COBRA, or any area of employment law, contact Thatcher Law Firm at 301-441-1400. www.ThatcherLaw.com. Email me at [email protected].
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