A court ruled that employer COBRA notices do not need to be in writing, however brokers should still advise their clients to provide written notices to cover all their bases in satisfying COBRA notice requirements.

In this particular case, an employee requested a reduced work schedule to accommodate her cancer treatment under the Americans with Disabilities Act, but her employment was instead terminated. The employer offered to continue her health insurance and the employee accepted. However, the employee claimed that she did so because she was informed she would lose her coverage if she didn’t maintain her insurance by immediately writing a check for the premium. The employee paid the premium, but then sued the employer for ADA violations and for failing to provide her with a COBRA election notice.

See related story: Warning: Failure to provide COBRA notices can cost your employer clients big

In this case, the court dismissed the employee’s COBRA claim for two reasons. First, the court concurred with the employer that there had been no COBRA qualifying event to trigger the need for a notice. Because the employee immediately wrote a check, she never lost coverage under the plan, so according to the court, no notice was required. Second, the court found that the COBRA statute does not specify the form the notice must take and that the employer gave adequate notice when it instructed the employee upon her termination to pay a premium to continue her health coverage.

“I would not recommend anyone advise their client that it’s OK to give verbal COBRA notices,” says Sheldon Blumling, a partner with Fisher & Phillips, LLC. “There’s so much information, according to the regulations, that’s required to be in a COBRA notice that it has to be in writing." Further, it would be difficult to prove the notice was given verbally and when that notice was spoken to the employee.

In this case, while the court correctly noted that the COBRA statute does not specify the form that a COBRA notice must take, it overlooked the Department of Labor's COBRA regulations requiring that a notice be “written” to be understandable by the average plan participant and that it include a long list of specified information. Under the statutory requirements, employers must give qualified beneficiaries at least a 60-day period in which to make a COBRA election, and then another 45 days in which to make the initial premium payment.

Not only could the employer in this case have been assessed statutory penalties for the notice violation, it could have also faced potential excise tax liability for its noncompliance with COBRA’s election and premium payment rules.

 “The best practice is to have a system in place that ensures that written notices get sent out and are sent out on a timely basis," says benefits attorney Blumling. Many people assume COBRA to be very straight forward, "but like anything with detailed regulatory requirements, the devil is in the details, and failing to give a COBRA notice on a timely basis can actually create a lot of liability for an employer.”

It’s important for employers to have an internal process in place to send written COBRA notices on time, even if they outsource COBRA notifications to an outside vendor. Employers still need timely internal processes in place to notify their vendor that an employee has had a qualified COBRA event.  

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