The Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) is federal law that requires an employee to have the ability to continue with their company-provided health insurance following the end of their employment. Following the end of an employee’s employment, if that employee was enrolled in the employer’s health insurance plan and the employer employs more than 20 employees, then the employer is required by law to provide documents to that employee disclosing the parameters of their COBRA insurance coverage.
The notice provided to each employee (or “qualified beneficiary”) must explain the employee’s rights and obligations. Assuming the administrator is not also the employer, the administrator has 14 days after receipt of notice of the “qualifying event” (i.e. termination) to provide this notice to the employee. If the employer is the administrator, then the employer has either 44 days after the qualifying event or 44 days after loss of coverage due to the qualifying event (i.e. if the employer voluntarily keeps an employee on its insurance plan even after termination, then it is 44 days after coverage ends).
The notice provided by the administrator must meet specific requirements. In fact, federal law explains 14 specific requirements that each notice must have to be in compliance. See 29 CFR 2590.606-4. These requirements include explicit details about who is a qualified beneficiary, how to elect coverage, how long continued coverage will last, the cost of the continued coverage, due dates of such payments and other specific required disclosures. Failure to timely distribute COBRA notice or the failure to include these specifics in the COBRA notice can lead to a $110/day per person penalty. In addition, the employer would be required to pay the employee’s attorneys’ fees and costs in addition to these penalties if an employee is successful in their claim.
If you have questions about whether your former employer complied with the federal notice requirements with regards to the COBRA notice you received, please do not hesitate to call us for a free consultation at (800) 616-4000.
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