Essential COBRA Updates

It’s essential to get everything right when it comes to COBRA coverage.  Whether you administer your COBRA plan, or it’s managed by an outside party, offering COBRA the right way and to the right people will help you avoid some hefty lawsuits and fines.  Employers (of all sizes) may have to handle COBRA lawsuits at some point (occasionally even class action lawsuits).  In these circumstances, ex-employees sue because the company or organization provided a technically deficient COBRA notice.  These deficiencies could include notices that don’t adequately explain how to elect COBRA coverage, notices that don’t explicitly and correctly share the end date for potential COBRA coverage, or other infractions.  It’s worth noting that many of these large employers have decided it’s better to simply settle outside of court for millions rather than try to fight.  In addition to the usual rules around COBRA, COVID has created a necessity for some new ones.  Below are some imperative COBRA updates you should know.  

 
COBRA updates: new model notices from the DOL 

Among the latest HR updates, the DOL released new model COBRA notices in May of 2020.  These versions expand upon COBRA and its interaction with Medicare and Medicare special enrollment periods.  One of the best HR strategies to stay in compliance with COBRA updates is to make sure your own notices model the DOL’s versions.  Though it isn’t required by law, it would be prudent to check out these revised COBRA notices from the DOL and to either copy them for your own use, or update your company’s notices with this additional information about Medicare and Medicare special enrollment periods.  

COBRA updates for COVID: new extensions on coverage dates 

Due to COVID-19, the IRS and DOL have required employers to delay COBRA deadlines from the period beginning March 1, 2020 and ending 60 days after the end of the national COVID emergency is declared.  This deadline extension applies to: 

• The date a group health plan, plan sponsor, or plan administrator must provide COBRA election notice to a qualified beneficiary. 
• The 60-day deadline by which an eligible beneficiary must inform their plan administrator that they’ve experienced a COBRA qualifying event.    
• The 60-day period during which an eligible beneficiary can request continued coverage. 

Notably, this deadline extension also applies to the due dates for making COBRA premium payments. Payments cannot be considered late until 60 days after the pandemic is declared over.  Thus, coverage can’t be canceled during this ‘outbreak period,’ due to late payments (per the CARES Act).   

When the national emergency is declared over, employers should add to their HR planning some strategies for notifying all relevant eligible beneficiaries that the windows for making COBRA premium payments or electing coverage will be closing.        

COBRA updates: a more litigious environment than ever 

If the HR updates above don’t incentivize you to make changes in your HR policies, you may change your mind when you learn about the surge of lawsuits against employers, including PepsiCo, Inc earlier this year, for (alleged) technical COBRA election notice deficiencies.  (Interestingly, a large percentage of these lawsuits occurred in Florida and New York. However, it’s important to note that a COBRA lawsuit could occur no matter what part of the country your business operates in.)  Take extra care right now to protect your company from becoming a part of these surge statistics.  You can do a few things to help ensure compliance: 

• Use a professional administrator who understands all relevant COBRA guidelines and requirements. 
• Regularly look to the DOL for COBRA updates.  Being ignorant of new regulations, like the COVID deadline extensions, won’t protect you.  It’s your company’s responsibility to stay up to date. 
• Try HR solutions like MP’s to facilitate your COBRA administration needs.  Reputable HR solutions will provide you with all the latest tools, like updated notices and tools to track eligible beneficiaries.     
• Don’t neglect the details.  A good faith effort isn’t enough to protect you from legal action.  Include administrators’ names, addresses, and other required details.  This extra step now could save you a lot of time and money in legal fees later.