18.3 Rights, Responsibilities, and Principal Defenses

LibraryEmployment Law in Virginia (Virginia CLE) (2020 Ed.)

18.3 RIGHTS, RESPONSIBILITIES, AND PRINCIPAL DEFENSES

18.301 Notice to New Employees. New employees and spouses must be provided notice of COBRA rights when coverage begins under the plan. 112 For COBRA initial notices and election notices, "courts require a good faith effort reasonably calculated to reach the intended employee and qualified beneficiaries." 113

The DOL regulations define the required content for the initial, or general, COBRA notice that must be furnished, in general, within 90 days after coverage begins under the health plan (or 90 days after the health plan becomes covered by COBRA, whichever is later). 114 Among other things, the initial notice should include:

1. The name of the plan and the name, address and phone number of the person responsible for administration of COBRA benefits;
2. A general description of the COBRA coverage under the plan;

[Page 838]

3. An explanation of the plan's requirements and procedures concerning the duty of a qualified beneficiary to notify the plan administrator of a qualifying event that is a divorce, legal separation, or a child ceasing to be covered 115 under the plan;
4. An explanation of the plan's requirements and procedures regarding the duty of qualified beneficiaries who are receiving continuation coverage to give notice to the plan administrator of a second qualifying event such as divorce, legal separation, death of covered employee, loss of dependent status, enrollment in Medicare, or a determination of disability by the Social Security Administration;
5. An explanation of the importance of keeping the plan administrator informed of current addresses of all participants and beneficiaries of the plan; and
6. A statement that the notice does not fully describe continued coverage or other rights under the plan and that more complete information is available from the plan administrator and the plan's summary plan description.

The regulation includes a Model General Notice as an Appendix to 29 C.F.R. § 2590.606-1. 116

[Page 839]

The regulations permit several means of delivery, including first-class mail to the last known address, electronic delivery, 117 and in-hand delivery. 118 If the plan's latest information is that the employee and spouse reside at the same address, then one notice addressed to both employee and spouse constitutes notice to both. 119

In Middlebrooks v. Godwin Corp., 120 the Fourth Circuit affirmed the district court's ruling that if a qualifying event occurs before the end of the 90day period within which an initial notice must be given, the notice provided pursuant to that qualifying event will simultaneously satisfy the requirement to provide the initial notice.

18.302 Election Rights. At a minimum, each qualified beneficiary has the right to elect continuation coverage at any time up to 60 days after the later of (i) the date upon which coverage terminates because of the qualifying event or (ii) the date upon which notice is received from the plan administrator of the right to elect continuation coverage. 121 In Lifecare Hospitals Inc. v. Health Plus of Louisiana, Inc., 122 the court found that because the plan did not limit the period of eligibility to make an election under COBRA, a former participant remained eligible to elect coverage at any time during the 18month continuation coverage period provided by the plan.

The qualified beneficiary cannot be compelled to pay the first premium for a period of 45 days following the election. 123 Thereafter, a beneficiary's

[Page 840]

failure to pay premiums entitles the administrator to terminate COBRA coverage. 124

18.303 Employer's Duty to Notify Administrator. Within 30 days after a covered employee's death, termination, reduction in hours, or Medicare entitlement (or the commencement of the employer's bankruptcy proceedings), the employer must notify the plan administrator that the event has occurred. 125

Different (and longer) time periods may apply for multi-employer plans. 126 The DOL regulations require the notice to provide sufficient information to enable the plan administrator to determine the identity of the plan, the covered employee, the qualifying event, and the date of the qualifying event. 127

18.304 Beneficiary's Duty to Notify Administrator. The qualified beneficiary must notify the plan administrator within 60 days after the later of (i) the date of divorce, legal separation, or loss of dependent child status 128 or (ii) the date the qualified beneficiary would lose coverage on account of the qualifying event. 129 Failure to give this notice results in loss of COBRA rights. 130 However, the final COBRA regulations provide that if the qualified beneficiary was not adequately advised of his or her duty to give

[Page 841]

notice of divorce, legal separation, or change in dependent status, the plan is not relieved of its duty to provide COBRA coverage. 131

In general, the employee and qualified beneficiary must also give notice to the plan administrator within 60 days of a second qualifying event after a qualified beneficiary has become entitled to COBRA coverage after a termination or reduction in hours of employment or if a qualified beneficiary already entitled to COBRA is determined to be disabled (or subsequently determined not to be disabled) by the Social Security Administration. 132

The DOL regulations require plans to establish reasonable procedures for furnishing notices by employees and qualified beneficiaries. 133 The procedures must:

1. Be described in the summary plan description;
2. Specify the person or entity to whom notice is sent;
3. Specify the means by which notice is given; and
4. Describe the information concerning the qualifying event or determination of disability that the plan deems necessary.

A plan may require use of a specified form for the notice, provided the form is easily available without cost.

18.305 Notice of Right of Election. The plan administrator has 14 days after receiving the notices described in paragraphs 18.303 and 18.304 to notify each qualified beneficiary of the right to elect continuation coverage. 134 Notice to the employee is not considered notice to the spouse-beneficiary. 135

[Page 842]

Failure to provide an initial COBRA notice does not preclude summary judgment for the employer, concluded one court, where the plaintiff had actually elected COBRA coverage and could not show any resulting prejudice. 136 Administrators do not have to guarantee that the notice is received after it is sent. 137 However, failure to advise a disabled beneficiary of the dates upon which premiums are due and of the beneficiary's right to elect individual coverage will invalidate a COBRA notice. 138

In Roberts v. National Health Corp., 139 the plaintiff testified that she received no COBRA notice and her employer could not produce a copy of the notice that was purportedly sent. The Fourth Circuit Court of Appeals affirmed the trial court's decision for the employer, finding that the employer had made a good faith attempt to comply with COBRA. The employer's business records provided evidence that a COBRA form letter was mailed to the plaintiff through its automated mailing system as part of the employer's customary mailing practices.

In Chesnut v. Montgomery, 140 a decision that preceded the DOL's proposed COBRA notice regulations, the Court of Appeals for the Eighth Circuit ruled that oral notice of the right to continued health coverage following employment termination satisfies COBRA requirements. The court noted that 29 U.S.C. § 1166(a)(1) expressly requires a written initial COBRA notice, but section 1166(a)(4) only provides that the plan administrator "shall notify" in the case of a qualifying event. The court concluded that the COBRA election notice "is merely a reminder of that right." The evidence in the record showed that plaintiff received repeated notification of her COBRA election rights.

Under the DOL regulations, where the employer and the plan administrator are the same entity, the notice of right to election must in general be

[Page 843]

furnished not later than 44 days (combining the 30-day and 14-day periods) after the qualifying event. 141

The DOL regulations require that COBRA election notices explain fifteen separate topics "written in a manner calculated to be understood by the average plan participant." 142 The regulations provide a Model COBRA Election Notice for single employer group health plans as an Appendix to 29 C.F.R. § 2590.606-4.

In Estate of Weeks v. Advance Stores Co., 143 the employer sent a timely COBRA notice to the former employee's address, but the notice was not opened because the former employee was hospitalized shortly after terminating employment. The former employee died without electing COBRA, and his estate sued for COBRA coverage, claiming that the employer breached its ERISA fiduciary duties by failing to provide COBRA information. The Court of Appeals held that the employer satisfied its COBRA obligations by sending the election notice and held there was no breach of fiduciary duties.

The DOL issued a new COBRA model election notice to inform qualified beneficiaries of the coverage options available in the marketplaces under PPACA. The new notices also explain the availability of premium and cost-sharing tax credits for the purchase of qualified health plan coverage from a marketplace. 144 Plan administrators should consider using the model COBRA election notice published by the DOL because the department considers its use to be good-faith compliance with COBRA's notice requirements.

18.306 Mailing COBRA Notices and Election Forms. Mailing COBRA notices in accordance with normal office procedures satisfies COBRA's notice requirements. 145 There is no obligation to confirm actual receipt by the

[Page 844]

employee. 146 There must, however, be proof of actual mailing of the notice. 147 As...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT