Legal Q&A on COBRA Notices

January 25, 2017

Question – If I have contracted with a third-party vendor to be my Company’s agent for COBRA notice purposes and that third party’s notice does not meet the requirements of COBRA, who has liability?

 

Answer – As the Employer, you – not the vendor – are ultimately responsible for your benefit plan compliance. The U.S. Department of Labor has published COBRA notice regulations, which contain 14 content requirements.In a recent class action suit, plaintiffs alleged that they could not find the “election form” to elect COBRA coverage on the website to which they had been directed. They further alleged that the notice did not state the name and address of the party responsible for the administration of COBRA benefits and failed to provide COBRA election procedures or election forms. They said the website was misleading and confusing.

 

The case ultimately settled for $290,000, plus the payment of the plaintiffs’ attorney’s fees.

 

Recommendation: Check your COBRA notice now to make sure it meets the requirements of the COBRA notice regulations. Review the notice to satisfy yourself that anyone can easily understand it and elect coverage. Finally, in your agreement with your third-party vendor, make sure you have a provision that requires the third-party vendor to indemnify your Company!

 

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