We go through a sample situation to help you understand what your company should do if you inadvertently issue a COBRA Notice with inaccurate details.
Susan’s COBRA Rates Conundrum:
You’re a rock star HR Manager. You keep good records, always provide timely benefits information, administer orientation like a pro, and have a system in place for providing important ERISA employee notifications. But today, you panic. You were busy with quarter end, and benefits renewal, and somehow the insurance rates provided for COBRA notifications didn’t get updated correctly. You notified your former employee, Susan with the COBRA Notice of Right to Elect the after day she left employment, but have realized the insurance rates provided to her were incorrect. Susan resigned weeks ago, and you must figure out how to properly notify her of the oversight.
We hear from worried employers dealing with the example scenario above regularly, as the regulatory mandates of COBRA often place a certain amount of anxiety on the shoulders of employers and benefits professionals in virtually all industries. If the example of Susan is something you have encountered, or if you are pro-actively planning for the future, fear not. There are always best-practice methods for handling incorrect COBRA notices.
The COBRA statute does not specifically address the scenario described above. That is, specific requirements for correcting mishaps on notices are not outlined. However, we can utilize prior Federal and state cases, and best-practice guidance from the U.S. Department of Labor to address situations like the mishap with Susan’s COBRA rates.
When you make a mistake on a COBRA notice, it is always best to correct it and show due diligence in making things right for the beneficiary. If the Employer discovers that the employee’s notice was incorrect within the initial 44-day time period (44 days from qualifying event date), then the Employer should simply provide a new notice with corrected rates, and a letter of explanation for the change. The 60-day election period would not start over in a situation like the one we described earlier, so the qualified beneficiary would have the remainder of his or her original 60-day election period to enroll (or not) in COBRA continuation coverage.
Similar best-practice approaches would apply for a notice with a correct event date. However, Employers should keep in mind that with COBRA, like any law, these situations should be carefully reviewed on a case by case basis. There is not a one size fits all approach for the complexities of COBRA.
In a situation involving a COBRA Notice that has been determined to have an incorrect qualifying event date, the Employer should make the correction and provide a Notice of Change showing the previous event date and the correction.
If the employee has already determined to elect COBRA coverage, or has already elected, careful review and proceedings should be administered to rectify the problem. Employers should consider consulting with Experts or an ERISA attorney for appropriate ways to handle these. One common way that employers can show good faith effort to rectifying mistake on premiums, is to offer to pay the difference (if the adjusted premium is higher) in premium for a certain number of days, weeks, or months depending on how long the coverage had already been extended out from the original event date.
Ultimately, Employers should do what they can to make things right, and carefully consider how the handling of the error would impact the employee and the company. While, it is clear that COBRA notices should be provided timely and accurately, human error such as a typo on a health premium is sure to arise on occasion, and it is the fiduciary responsibility of the employer (even when COBRA is outsourced) to show due diligence in rectifying errors. This is sure to result in properly handled COBRA members and mitigate the risks such as penalties and potential claims.
If you have questions about correcting COBRA notices, contact the Cobra Help Experts. We have seen it all in our 32+ years of business and welcome the opportunity to help you navigate the complexities of human resource compliance and leave management.
The information in this blog post (“post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from CobraHelp. or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.