When an employee has a qualifying event that causes a loss of his or her group health plan coverage, an employer subject to COBRA is obligated to provide the employee, and any other qualified beneficiaries, with notice of their right to elect continuation coverage under COBRA. Employers are often not aware of their obligation to provide COBRA election notices to the other qualified beneficiaries, including covered spouses and dependent children, on the employee’s group health plan. Employers need to “use measures reasonably calculated to ensure” that beneficiaries actually receive the notice. It is not necessary to prove the beneficiary actually received notice, but employers and plan administrators should be able to prove they used measures reasonably calculated to ensure notice.
Hand-delivery to an employee at the workplace is acceptable. However, when it comes to the other beneficiaries on a covered employee’s plan, it is never guaranteed that hand-delivery of the COBRA notice to the employee will constitute notice to other qualified beneficiaries. It is not the employee’s obligation to notify other qualified beneficiaries of their COBRA rights. On her way out of the office for the last time, or after she has learned that her hours are being cut, an employee has other concerns besides making sure his or her spouse and children see paperwork handed to him or her on the way out. Additionally, it is difficult to prove hand-delivery of COBRA election notice without a signed receipt from the employee. In a lawsuit for failing to provide COBRA election notice, a plan administrator or employer will face an uphill battle arguing that hand-delivery to the employee sufficed as a reasonably calculated measure to ensuring actual receipt by other qualified beneficiaries.
So what should employers and plan administrators do? A reliable and statutorily-approved method of sending notice is through first-class mail. Second and third-class mail are also permissible, but only when extra postal features are included. Therefore, it is generally better to use first-class mail. Using the mail is an inexpensive, reliable, and compliant approach to providing COBRA election notice to qualified beneficiaries. By relying on first-class mail, employers will also appreciate having a single universal policy to providing notice. A final exit interview may be used to confirm current mailing addresses.