COBRA? Loss of Coverage? More than you think...(Article)
In a recent court decision by the U. S. District Court of Maryland [Green et. al v. Baltimore City Board of School Commissioners, 2015 WL 302812 (D. Md., Jan. 22, 2015)], a COBRA violation was found. In this case, two employees employed by a public school were suspended under separate unrelated circumstances. As a result of the suspension (reduction in hours), the employer’s contribution toward health coverage for these two employees stopped. The employees were not immediately offered COBRA. Instead, one of the employees was told to contact the Office of Benefit Management to discuss benefit options; and the other employee simply assumed her coverage ceased upon the suspension.
As background, for COBRA to apply, two events have to happen. First, there has to be a COBRA qualifying event. In this case, the reduction in hours resulting from the suspension constituted a qualifying event. Further, there must be a loss of coverage. The change in contribution constitutes a loss of coverage; it does not require actual elimination of coverage. Rather, as the Court underscores, the change in cost constituted a loss of coverage warranting a full COBRA notice.
This case serves as an important reminder of the significance of ensuring careful COBRA compliance.
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