QUESTION: Our company (as plan administrator of our health plan) recently mailed a COBRA election notice by first-class mail, but it was returned as undeliverable. What should we do?
ANSWER: This can be a difficult decision. COBRA requires only that the plan administrator mail the notice to the qualified beneficiary’s last-known address. But courts have applied “inquiry notice” and “fiduciary responsibility” theories to impute to plan administrators knowledge that a qualifying event has occurred, and those theories could be extended to a returned election notice when a plan administrator knows that a notice has not been received. It seems to us that plan administrators should, at a minimum, consider the possibility that the notice was sent to the wrong address and confirm that the last-known address on file was used. You may also want to do one or more of the following:
- Ask the insurer or third-party administrator (TPA) if a different address is on file. Recent claims may have triggered correspondence between the insurer or TPA and the qualified beneficiary showing that the qualified beneficiary has a new address.
- Check with other departments (e.g., payroll or human resources) or pension benefits administrators to see if they have a more recent address for the qualified beneficiary.
- Call the home or cellular telephone number last given by the qualified beneficiary.
- Check with coworkers of the former employee if the qualifying event was a termination of employment.
- And, of course, if the qualified beneficiary contacts you about not receiving the notice, get current contact information and send the notice again.
To protect against a related COBRA lawsuit, be sure to create a written record of whatever steps you take (e.g., a descriptive memo to the file or copies of written inquiries and responses). In addition, your plan’s summary plan description (SPD), COBRA initial notice, and other benefits and HR communications—including termination letters—should conspicuously remind qualified beneficiaries to keep you informed of any address changes and include specific directions for doing so.
For more information, see EBIA’s COBRA manual at Sections XVIII.I (“Each Qualified Beneficiary Must Be Furnished the Election Notice”), XVIII.J (“Sending the Election Notice and Proving It Was Sent”), and XVII.D (“Reasonable Notice Procedures”).
Contributing Editors: EBIA Staff.