It’s Open Enrollment Season: That COBRA Notice Could Cost You
Dan Moore
The list of employers being sued for a violation of COBRA is expanding, but many employers can avoid being added to that list by exercising caution. The extra effort could help you avoid being assessed a penalty of up to $110 per day per violation.
The easiest place to start is including the general COBRA notice in your open enrollment materials. The notice informs participants and spouses of later opportunities to elect COBRA and must be distributed when participants first become covered. Employers who fail to provide this notice cannot deny a COBRA election.
If you’re not using the DOL's model election notice, you may want to reconsider that decision. A review of the most recent court cases makes it clear that if the model notice had been used, many of the lawsuits could have been avoided. Here is a list of the information that is alleged to have been missing from some of the COBRA notices at the center of these lawsuits:
- The name, address, and telephone number of the COBRA administrator, as well as the identity of the plan administrator;
- The right of a spouse or legal guardian to elect COBRA coverage on behalf of other qualified beneficiaries;
- The consequences of waiving COBRA coverage, including the impact on portability rights;
- The availability and length of a COBRA coverage extension under certain circumstances; and
- The availability of more information in the summary plan description for more information.
While penalties are discretionary, courts have historically viewed these cases as an opportunity to reinforce the ERISA fiduciary obligations that are imposed upon plan administrators. Bottom line, failure to provide compliant notices to your health plan enrollees can be costly.