Benefits Insights

There are a lot of reasons to have updated addresses for all your employees, COBRA is definitely one of them. Based on recent case law, it’s more important than ever for employers to have a change-of-address process that keeps the person responsible for providing COBRA election notices in the loop.

Qualified beneficiaries (e.g. former covered employee, former spouse of employee, dependent child, etc.) have a minimum of 60 days to elect COBRA. The 60 day period starts on the later of the date that coverage is lost under the employer’s plan or the date that a COBRA election notice is provided.  There have been some recent developments regarding the requirements for providing such notices.
 
Under the regulations, plan administrators (usually the employer) must provide election notices to qualified beneficiaries. The regulations require that COBRA election notices be provided using “measures reasonably calculated to ensure actual receipt of the material.” So what does that mean?

In Newton v. Prator, a federal district court judge in Louisiana recognized that the regulations only require that an employer operate in good faith when sending COBRA election notices. However, this case emphasizes the importance of acting in good faith when determining where you send the election notice. The employer in Newton v. Prator, like most employers do, mailed the former employee a COBRA notice to his last known address, or at least the address last known to the person responsible for sending COBRA election notices. In Newton v. Prator, it appears that an update to the former employee’s address was not communicated to the person responsible for sending COBRA election notices.  As a result, the COBRA election period may be extended, the employer may be liable for medical expenses incurred during the election period, and the employer may be subject to penalties for failing to comply with the regulations.

Employers should be proactive and implement policies and procedures that include a change-of-address process that reduces the risks associated with providing COBRA election notices. A former employee’s last known address does not necessarily have to be the correct address, but the employer must have sufficient policies and procedures to pass the good faith test.