What is COBRA?
COBRA stands for Consolidated Omnibus Budget Reconciliation Act and is an amendment Employee Retirement Income Securities Act (ERISA) that allows employees to continue their employer’s health coverage after a “qualifying event.” Employees who elect to continue benefits under COBRA may stay on their employer-sponsored health insurance plan for 18 to 36 months. This coverage may extend to an employee’s spouse and dependents.
Before addressing common COBRA violations, it is important to discuss employees’ rights and employers’ obligations under COBRA.
How do I know if I qualify under COBRA?
Almost all companies with 20 or more employees have healthcare plans covered by COBRA. You are a qualified beneficiary as long as you were covered by your company’s group health plan before the occurrence of a “qualifying event.”
Qualifying events include:
- Death of the covered employee
- Termination or voluntary resignation of employment
- Reduction of hours
- Divorce or legal separation
- An employee becoming eligible for Medicare
How do I find out about my coverage under COBRA?
Following a qualifying event (listed above) the employer has 30 days to notify the Plan administrator. See 29 U.S.C. § 1166(a).
The plan administrator then has 14 days with which they can supply you with a notification of your rights to continued coverage. See 29 U.S.C. § 1166(c).
You then have at least 60 days from the time of notification to decide whether you want to stay on your previous health plan. Each plan beneficiary may choose for themselves whether they would like to stay on the plan or not.
Do I need to pay for COBRA coverage?
Yes. Under COBRA, you can continue to participate in your previous employer’s health plan, but you are now responsible for certain expenses previously paid by your employer.
What are my employer’s responsibilities related to COBRA?
Employers have numerous responsibilities under COBRA, including tracking employee notices and deadlines. All too often, employers fail to comply with these requirements.
Some common COBRA violations include:
- Failure to supply initial notice to new employees
- Failure to provide notice after a qualifying event
- Not offering open enrollment
- Failure to recognize a qualifying event
- Non-compliance with Medicare requirements
- Improper extension of COBRA time periods
- Poorly worded notices that do not comply with DOL standards
- Failure to properly record the sending of notices
- Failure to collect COBRA premiums
- Overpayment of insurance invoices
Are there penalties for failing to provide a COBRA notice?
Yes. According to ERISA, an employer or plan administrator can be penalized for up to $110 for each day that the violation continues. See 29 U.S.C. § 1132(c)(1); 29 C.F.R. § 2560.502c-3. In addition to these substantial penalties, a court may order an offending employer to pay the employee’s attorney’s fees and litigation costs.
Is it possible to hold my former employer liable for medical bills?
Yes. For example, in Torres-Negron v. Ramallo Bros. Printing, 203 F. Supp. 2d 120, 125 (D.P.R. 2002), plaintiff filed a lawsuit alleging that after her employment was terminated, her former employer failed to supply her with appropriate notice of her and her child’s rights to continued coverage under COBRA. The court awarded plaintiff $45 per beneficiary for each of the 271 days that her former employer failed to notify her of her rights. The employer was also required to pay plaintiff’s attorney’s fees. Importantly, the court ruled that an employee’s knowledge about his or her COBRA rights does not negate an employer’s COBRA duties.
If your employer or plan administrator fails to properly notify you of your rights to continued coverage, they may be liable for any medical bills you acquire during that period. As shown in Ward v. Bethenergy Mines, Inc., 851 F. Supp. 235, 239 (S.D. W.Va. 1994), plaintiff was fired from her job and her employer did not supply her with a COBRA notice within the allotted time. During this period, plaintiff incurred medical bills, and the court found the former employer responsible for those debts. In addition, the employer was ordered to fix the plaintiff’s credit score, since it was damaged by the medical bills that the defendant is now responsible for.
Similarly, in Kidder v. H & B Marine Inc., 932 F.2d 347 (5th Cir. 1991), the court of appeals affirmed the liability of an employer that failed to notify the plan administrator of a qualifying event–the employee’s termination. The Fifth Circuit noted: “As a result of section 1166(a)(2), H & B Construction, as the employer in this case, obviously had a responsibility to notify the plan administrator of the occurrence of a qualifying event. Thus H & B Construction bore some notification burden in addition to its responsibility to provide the continuation coverage.”
What are my legal options?
If you believe that your current or former employer violated your rights under COBRA within the past 6 years, you should consult with a lawyer about bringing a lawsuit. Call us at 844-696-7492 (toll-free) to learn more about your rights concerning your employee benefits plan or click here to submit your info.
Edelson Lechtzin LLP is a national class action law firm with offices in Pennsylvania and California. In addition to cases involving employee benefits plans, our lawyers focus on class and collective litigation in cases alleging violations of the federal antitrust laws, securities and investment fraud, wage theft and unpaid overtime, consumer fraud, and dangerous and defective drugs and medical devices.