The Road to Hell Is Paved with Good Intentions: COBRA Compliance in the Wake of COVID-19 Downsizing

• Published in: Benefits law journal 2020-07, Vol.33 (2), p.26-34
• Main Authors: Costin, Emily Seymour, Gillihan, Ashley
• Format: Article
• Language: English
• Subjects: COBRA 1985-US; COVID-19; Downsizing; Employees; Employers; Insurance coverage; Litigation; Trends
• ISSN: 0897-7992

Several large employers have recently been hit with a new wave of lawsuits challenging their compliance with the notice requirements of the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA-which is an amendment to the Employee Retirement Income Security Act of 1974 (ERISA)-requires an employer to send notice to an employee regarding their health coverage upon termination. This continuation of coverage election notice is designed to provide a former employee with sufficient information to make an informed decision about whether to elect such continued health coverage. This type of COBRA notice litigation is showing no signs of slowing down. The hasty and rampant downsizing due to the COVID-19 crisis has only provided more potential plaintiffs (terminated employees) and defendants (downsizing employers). As many employers and plan administrators may find themselves sending hundreds, if not thousands, of COBRA election notices in the coming months, this article explores the requirements for COBRA notice compliance, summarizes recent litigation trends on this issue, and provides practical tips to mitigate against such litigation risks.