The last few years have seen many class action lawsuits surrounding COBRA Election Notices. Penalties and fines for various notification inadequacies can be STEEP, including $110 per day of noncompliance, as well as possible liability for medical and legal expenses reimbursement. Many employers have settled these types of lawsuits rather than litigate. Now is a great time for employers and administrators to evaluate the federal and state regulated requirements (these aren’t “guidelines” or suggestions folks) regarding the election notice process, content, and timelines.
One Notice that often flies under the radar and is missed entirely by employers is the “General” or “Initial” Notice (both terms are used). The intent of the Initial Notice is to provide basic information regarding COBRA and the rights and responsibilities of qualified beneficiaries to ensure they have the information they need before the occurrence of a qualifying event. The Initial Notice requires that each covered employee as well as their spouse (if covered) be notified within 90-days of their coverage election. One exception to the 90-day requirement is if the administrator is required to furnish an Election Notice to the employee or covered spouse within that same timeframe, thus precluding the need for an Initial Notice.
A key component of the Initial Notice is delivery of the notice to the participant and the covered spouse. It is worth noting that there is no requirement to notify qualified dependents. If mailing, one notice may be sent if the plan administrator’s latest information is that both the participant and covered spouse share a residence. If the participant and covered spouse do not share a residence, individual notices must be sent. Many employers provide the Initial Notice by hand to the employee, which seems efficient and straightforward, but hand delivery to the employee at work does NOT satisfy the requirement of notifying the covered spouse. Cobra Allies recommends that mailed notices always be sent in addition to any hand-delivered version.
Please contact your Service Ally today at service@cobraallies.com or 1-888-209-5074 if you have any questions or concerns regarding Cobra Notices. We look forward to hearing from you!
