COBRA Election Notice – What Everyone Should Know
Seems we’ve all heard of COBRA. “If you leave your job, you can get COBRA insurance.”
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, which is a health insurance program that provides continued benefits of coverage when an employee loses their job or experiences a reduction of work hours.
How Does COBRA Work?
COBRA requires the continuation of health insurance coverage to be offered to covered employees, their spouses, former spouses, and dependent children when their group health coverage would otherwise lapse in certain situations. It’s a temporary extension until they can secure other health insurance coverage.
As far as eligibility, COBRA generally requires that group health plans sponsored by employers with 20+ employees in the prior year offer their employees and their families the chance to purchase continuation coverage in certain circumstances where coverage under the plan would otherwise cease.
To be able to choose COBRA continuation coverage, the following must be satisfied:
- Your group health plan must be covered by COBRA;
- A qualifying event must happen; and
- You must be a qualified beneficiary for that event.
What is a Qualifying Event?
Qualifying events are events that cause an employee to lose his or her group health coverage. Precisely who the qualified beneficiaries are for that event and the amount of time that a plan must offer continuation coverage is established by the type of qualifying event. COBRA only dictates the minimum requirements for continuation coverage, but an employer’s plan may always elect to provide longer periods of continuation coverage.
Employee Qualifying Events
Here are the qualifying events for covered employees if they cause the covered employee to lose coverage:
- Termination of the individual’s employment for any reason other than gross misconduct; or
- A reduction in the number of hours of the individual’s employment.
Spouse and Dependent Child Qualifying Events
These are qualifying events for a covered employee’s spouse and dependent child if they cause the spouse or dependent child to lose coverage:
- Termination of the covered individual’s employment for any reason other than gross misconduct;
- A reduction in the hours worked by the covered employee;
- The covered employee becomes entitled to Medicare;
- The divorce or legal separation of the covered employee and his or her spouse; or
- The death of the covered employee.
A qualified beneficiary is a person covered by a group health plan on the day before a qualifying event occurred that caused him or her to lose coverage.
What is a Cobra Election Notice?
When the plan gets notice of a qualifying event, it must provide the qualified beneficiaries with a COBRA Election Notice that details their rights to continuation coverage and how to make an election. The notice has to be provided within 14 days after the plan receives notice of the qualifying event.
In some instances, an employee who provides notice of a qualifying event doesn’t receive a COBRA Election Notice. As a result, his or her healthcare coverage is terminated. This can cause unreasonable medical expenses and other damages.
What are the Common COBRA Notice Errors?
When there’s an issue with a COBRA Election Notice, it may be for one of the following reasons:
- The employer sent the COBRA Election Notice late;
- The employer sent multiple COBRA letters, instead of just one;
- The employer failed to recognize when a qualifying event occurred;
- The COBRA Election Notice failed to name the plan administrator or the COBRA claims administrator;
- The COBRA Election Notice failed to give sufficient information on how to enroll in COBRA;
- The COBRA Election Notice failed to enclose a physical enrollment form; and
- The employer complied only with the federal law but not the applicable Florida state COBRA (“mini-COBRA”) law.
An employer subject to COBRA requirements must inform its group health plan administrator within 30 days after an employee’s employment is terminated or employment hours are reduced.
Are There COBRA Penalties?
Even though COBRA doesn’t set out any specific penalties, if an employer doesn’t provide timely election notice, there are potential fines under the Internal Revenue Code and ERISA (the Employee Retirement Income Security Act of 1974). A judge can impose a penalty on an employer of a $100 excise tax for each day the notice is late, and $200 per day if more than one person is affected, such as a spouse or dependent. There is also a $110 per day penalty under ERISA.
In addition to these administrative penalties, some workers will bring a lawsuit for damages, such as medical expenses that would have been covered had the employer properly made an offer of COBRA. An experienced employment law attorney from Florin Gray can help you determine if you have a valid claim and decide the best legal strategy to help you achieve the best possible outcome.
Can I Sue My Former Employer for Errors with a COBRA Election Notice?
Yes. The failure of an employer to provide the COBRA Election Notice can bring about a potential lawsuit from the impacted qualified beneficiaries. Contact an experienced employment law attorney from Florin Gray to discuss the specific facts of your case. Your attorney can investigate the timing of events to help with the strategy for your case.
COBRA Election Notice lawsuits are becoming more frequent. For example, former employees of a big box store in Florida recently sued because the COBRA Election Notice sent left out important language from the Labor Department’s model notice. Another company has been accused of sending the COBRA Election Notices with threatening warnings about fines in an attempt to intimidate qualified beneficiaries into not choosing to take COBRA benefits.
An experienced employment attorney may be able to help you obtain compensation for your treatment and damages from your former employer’s mistakes with your COBRA Election Notice. Contact an experienced employment law attorney at Florin Gray.
At Florin Gray, our legal team is dedicated to the pursuit of justice for the people we represent. Our employment law firm has more than 100 years of combined experience successfully representing clients in employment law. We operate differently than many law firms and always put the best interests of our clients first.
The statute of limitations in Florida for COBRA notice violations is four years, which means there’s a deadline of when you can file a lawsuit over a COBRA notice.