Employers are seeing an increase in lawsuits from former employees alleging deficient Consolidated Omnibus Budget Reconciliation Act (COBRA) election notices. These lawsuits are generally class actions and can result in significant attorneys’ fee awards for successful ex-employees. Understanding current COBRA notice regulations and litigation trends can help employers stay compliant and avoid costly lawsuits.
What Is a COBRA Notice?
Most employer-sponsored group health plans must comply with the Employee Retirement Income Security Act (ERISA), which establishes standards for protecting employee benefits. One protection established by ERISA is an employee’s right to continued health insurance coverage under COBRA.
COBRA allows former employees and their families to continue their health insurance for a limited time after a qualifying event. Qualifying events include:
- Termination of employment
- Reduction of work hours for reasons other than misconduct
- Death
- Medicare eligibility
- Divorce
- A child’s loss of dependent status
Employers must provide former employees with notice that they may elect to continue their health coverage.