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A Service of OnQue Technologies, Inc. |
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When Employer is Plan
Administrator: How Many Days Are Allowed to Provide COBRA Qualifying Event
Notice — 14 or 44?
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April 23, 2003
Santa Rosa, CA |
Editor's Note: The issues presented in this
article were resolved when the Department of Labor (DOL) published the final
COBRA regulations on May 26, 2004
(Health Care Continuation Coverage; Final Rule). The
regulations, which address COBRA notice requirements, provide that an employer
that is also the plan administrator has 44 days to provide the qualifying event
notice.
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Not for the first time
and probably not for the last, a judge has been asked to answer this question:
Does an employer have 14 or 44 days to provide a COBRA qualifying event notice,
when the employer is also the plan administrator?
We'll look at the recent case
of Anderson v. Royal Crest Dairy and explain why the issue is not as cut and
dried as you may think.
But first, a quick summary of the relevant COBRA
law:
- When a COBRA
qualifying event such as termination or reduction in hours occurs, and that
event results in a loss of group health plan coverage, covered employees must
be notified of their right to elect continuation coverage.
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- The employer
must notify the plan administrator within 30 days of the occurrence of such a
qualifying event.
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- The plan
administrator must notify qualified beneficiaries of the right to elect COBRA
within 14 days of receiving notice of the qualifying event.
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When the employer is also the plan
administrator. Although it seems straightforward enough, the situation
becomes a bit more complicated when the employer and the administrator are one
and the same. Many courts have interpreted COBRA law to say that the employer
has a total of 44 days when the employer acts as plan administrator — 30
days as the employer plus 14 days as the plan administrator. But not all judges
who have looked at the issue agree with this interpretation, including the
judge in the Anderson case.
Department of Labor opinion letter. Courts
and COBRA administrators often rely on a 1995 opinion letter issued by the
Department of Labor (DOL). At that time, the president of COBRA Compliance
Systems, Inc.(CCS) asked the DOL to clarify the issue of how much time an
employer/administrator has to notify a qualified beneficiary of the right to
elect COBRA. (Coincidentally, in Anderson v. Royal Crest Dairy, CCS is the
off-site service provider under contract with Royal Crest to assist in its
implementation of COBRA.) In its response to CCS, the DOL concluded that an
employer who is also the plan administrator would have 44 days in which to
notify a qualified beneficiary. But DOL opinion letters are just that -
opinions given for specific situations. At best a DOL letter is only a
guideline and, in the Anderson lawsuit, the judge declined to follow the DOL's
opinion letter.
Conclusion. The important thing to note is
that there's no hard rule - it may not be reasonable in every situation for an
employer who also acts as plan administrator to have the benefit of a full 44
days in which to give notice of a qualifying event. In some circumstances, the
employer/administrator might be allowed only 14 days in which to provide the
required COBRA notice. For example, the qualified beneficiary in the Anderson
case suffered from a chronic illness and the 34 days without coverage created a
serious hardship for her, regardless of the fact that coverage was eventually
made retroactive. The court in that case questioned whether it is always
reasonable to give the employer/administrator the full 44 days when it knows
immediately that a qualifying event has occurred. In most cases, the best
action would be to provide the notice as soon as possible. |
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| Related Court
Case |
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Anderson v. Royal Crest
Dairy: Worker Alleges Late Notice...Says Employer Violated 14-Day
Limit |
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This information is provided by
OnQue Technologies, Inc. for educational purposes only and does not constitute
legal advice. If legal advice or other professional assistance is required, the
services of a competent professional should be sought.
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