June 15, 2021
Authored by: Randy Scherer and Lisa Van Fleet
While the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) continuation coverage subsidy requirements imposed by the American Rescue Plan Act of 2021 (previously discussed here and here) are at the forefront of employers’ minds, recent litigation trends should motivate plan sponsors to review their standard COBRA election notices to ensure they comply with the general requirements in the regulations promulgated by the Department of Labor (“DOL”).
The regulations require COBRA notices be written in a manner calculated to be understood by the average plan participant. Required information includes:
- The name and plan under which continuation coverage is available;
- The name, address, and phone number of the plan administrator;
- Identification of the qualifying event;
- Identification of the qualified beneficiaries (by status or name) who are recognized by the plan as being entitled to elect continuation coverage due to the qualifying event;
- An explanation of the procedures for electing coverage, and the consequences of failing to elect coverage;
- A description of the coverage available;
- The time period for which the coverage is available; and
- The cost of coverage and due dates for payments.
A spate of recent litigation reminds us that failure to include required information in COBRA election notices may expose the plan sponsor and the plan administrator to claims from participants and beneficiaries. Further, if the information included in COBRA election notices is likely to confuse participants and beneficiaries, there may be potential liability for failure to provide a