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Recent litigation emphasizes a vital reminder for employers that with COBRA notices, a good faith effort to comply is not a legal defense. The case Marrow v. Carpenter Company centers on an employee who claimed she lost coverage due to a deficient COBRA notice. The court ruled that a “good faith effort” to comply with COBRA notice requirements is insufficient to survive a motion to dismiss – but the broader takeaway for employers is clear: technical compliance with COBRA requirements is essential. Even well-intentioned missteps can expose an organization to litigation and liability.
The Importance of COBRA Notices
The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires group health plans to offer continuation coverage to employees and their covered spouse after qualifying events such as termination of employment. Critical to this process is the COBRA election notice, which must:
- Be clear and understandable,
- Include all required information about election deadlines and procedures, payment terms, and plan details, and
- Be provided within the legally mandated timeframe.
This notice often serves as the sole source of information for former employees navigating their health coverage options during a time of stress or transition. Any ambiguity or inaccuracy can lead to significant financial consequences—for both the employee and the employer.
Common COBRA Notice Mistakes
Even employers with the best intentions can fall short of compliance and the liability for non-compliance can be steep – up to $110 per day per participant. Some of the most frequent COBRA notice errors include:
- Failing to provide notices on time after a qualifying event
- Not using the Department of Labor (DOL) Model Election Notice or modifying it to the point of noncompliance
- Providing inconsistent or confusing information about deadlines and payment amounts
These issues can undermine an employee’s ability to make an informed decision and may lead courts to find that the employer failed in its legal obligations.
Employer Action Items
To mitigate risk and support compliance, employers should adopt the following action steps.
- Use the DOL Model COBRA Election Notice. Customize only where necessary and ensure no essential information is omitted.
- Review all language for accuracy and readability. Confirm that election timelines, payment instructions, and contact information are current and clearly presented.
- Periodically review your organization’s COBRA notices and administrative processes.
- Train HR and Benefits Teams. Ensure all team members involved in COBRA administration understand the legal requirements and how to properly and timely issue notices.
- Maintain records of when, how, and to whom COBRA notices were sent. Use delivery methods that allow tracking and confirmation.
- Involve Legal or Benefits Counsel. If there’s any uncertainty about your notice content or process, consult with qualified legal or compliance professionals.
This information has been prepared for UBA by Fisher & Phillips LLP. It is general information and provided for educational purposes only. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors.
