February 9, 2011

COBRA Process Important

Several recent court decisions remind us of how important it is to have a COBRA procedure that is well documented and followed meticulously.

In Rios v. Alternate Concepts, Inc., 2010 WL 5095804 (D.P.R. 2010), the employer hand-delivered the COBRA election material to the employee.  While hand delivery is permissible, and, in this case, the employer had documentation that, in fact, the COBRA information was provided, this method will not satisfy delivery to dependents/qualified beneficiaries.  If hand-delivery is to be used, it is important that the employer maintain good accurate records to prove that the information was delivered to all intended parties, as underscored by this case.

In another case, Boddicker v. Esurance, Inc., 2010 WL 5186255 (D. S.D. 2010), the accuracy of the qualified beneficiary’s address was in question.  This case reminds us of how important it is to keep good records of employee addresses.  And, it is further important to put the employee on notice that it is his/her obligation to keep the plan informed of address changes.

In a third opinion, Myers v. Carroll Indep. Fuel Co., 2011 WL 43085 (D. Md. 2011), the issue of responsibility for COBRA notification was in question.  Generally, the plan administrator is responsible for COBRA notification.  The plan administrator is the employer, unless otherwise designated. 

Once again, we are reminded of how invaluable it is to have a COBRA procedure that is followed carefully, each and every time.  The old adage, “An ounce of prevention is worth a pound of cure”, is surely borne out in these cases.


The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

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