In a recent case, a federal district court ruled that an employer didn’t violate the Comprehensive Omnibus Budget Reconciliation Act (COBRA) — even though an employee who resigned from the company claimed that she never received notices that she was entitled to continue her health insurance benefits.
Under the law:
- COBRA was passed in 1986 to provide continuation of group health coverage that otherwise might be terminated.
- Employers with 20 or more employees are generally required to offer COBRA coverage and notify employees of its availability.
- COBRA gives certain former employees, retirees, spouses, former spouses and dependent children the right to temporary continuation of health coverage at group rates. This is only available when coverage is lost due to specific “qualifying events.”
- Qualifying events include voluntary or involuntary termination for reasons other than gross misconduct, reduction in hours, divorce, death of the covered employee and other situations.
- Group health coverage for COBRA participants is usually more expensive than coverage for active employees. However, it’s generally less expensive than individual health coverage.
— Source: The U.S. Department of Labor
- A plan administrator is required to give each participant a notice of certain health insurance coverage rights 44 days after a “qualifying event,” such as the termination of the participant’s employment.
- If a plan administrator fails to provide the required COBRA notice, it may be “personally liable to such participant or beneficiary in the amount of up to $110 per day from the day of such failure.”
Facts of the Case
The employer submitted as evidence an affidavit by the delivery manager of its plan administrator, who is responsible for ensuring that COBRA notices are sent to departing employees, as directed by the employer. The affidavit stated that based on the delivery manager’s review of the computer records, the COBRA notices were sent to the employee by regular mail on March 7, 2014, and on February 17, 2015.
According to the U.S. District Court for the Western District of Michigan, the affidavit properly supported the employer’s contention that it complied with COBRA by having notices mailed to the employee.
The court noted that several other courts have specifically found that: “Several courts have specifically found that employers are in compliance with Section 1166(a) when they send COBRA notices via first class mail to an employee’s last-known address.” (Perkins v. Rock-Tenn Services, Inc., DC MI, 1:15-cv-8, 6/6/16)
Bottom line: The fact that the employee didn’t receive the COBRA notices didn’t mean that the employer failed to comply with the law. The court stated there was “no genuine dispute that (the company) complied with COBRA.”
Documentation Is Key
Many employers do their best to provide required COBRA notices to employees — but some fall short when it comes to documenting that notices were sent. If a federal government investigator requests proof that you mailed notices, you’ll need to provide it. So you must document the sending of notices. And you should adhere to the established procedures you have in place.
For more information, consult with your HR professional or employment attorney.