Losing a job or experiencing a reduction in work hours can be stressful, especially if it results in the loss of employer-sponsored health insurance. To protect employees from sudden coverage loss, the Consolidated Omnibus Budget Reconciliation Act (COBRA) requires certain employers to offer continued health coverage for a limited time. However, if an employer fails to provide COBRA coverage, affected employees may face unexpected medical expenses and significant financial strain.
If your employer has not offered COBRA as required by law, you might be wondering: Can I sue my employer for not offering COBRA? The short answer is yes—employers who fail to comply with COBRA regulations can be subject to legal action, fines, and penalties. This article will explore COBRA requirements, employer obligations, employee rights, and legal remedies available when an employer does not provide the mandated COBRA notice or coverage.
What Is COBRA?
COBRA is a federal law enacted in 1986 as part of the Employee Retirement Income Security Act of 1974 (ERISA). It allows eligible employees and their dependents to continue health insurance coverage under their employer’s group health plan for a limited period after a qualifying event, such as:
- Job termination (except for gross misconduct)
- Reduction in work hours below eligibility requirements
- Divorce or legal separation
- Death of a covered employee
- Dependent child aging out of the plan
- Covered employee qualifying for Medicare
COBRA applies to private-sector employers with 20 or more employees on at least 50% of business days in the previous calendar year. Government employers at the state and local levels are also subject to COBRA, but federal government and certain church-based plans are exempt.
Employer Responsibilities Under COBRA
Employers who are subject to COBRA must fulfill the following obligations:
- Provide a General Notice – When an employee first becomes covered under a group health plan, employers must provide a COBRA General Notice explaining COBRA rights.
- Notify Plan Administrators of a Qualifying Event – Employers must notify their group health plan administrator within 30 days of a qualifying event (e.g., job termination or reduction in hours).
- Provide a COBRA Election Notice – Within 44 days of a qualifying event, the employer (or plan administrator) must provide a COBRA Election Notice to eligible employees and dependents.
- Offer Continuation Coverage – If an employee elects COBRA coverage within 60 days of receiving the notice, the employer must continue providing the same benefits as under the original group plan for the applicable period (usually 18 to 36 months).
Failure to comply with these requirements can lead to severe consequences for employers.
What Happens If My Employer Fails to Offer COBRA?
If your employer does not offer COBRA when required, they are violating federal law. The consequences for an employer’s non-compliance may include:
Financial Penalties
- The Department of Labor (DOL) can impose a penalty of $110 per day for each employee who did not receive a COBRA notice on time.
- The Internal Revenue Service (IRS) can assess an excise tax penalty of $100 per day per affected individual, or $2,500 per violation—whichever is greater.
Employer Liability for Medical Expenses
If an employee incurs medical costs due to a lapse in coverage caused by the employer’s COBRA violation, the employer may be held liable for those expenses.
Civil Lawsuits
Employees who suffer harm from COBRA violations can file a lawsuit against their employer. Courts can order employers to:
- Pay for medical expenses incurred due to loss of coverage.
- Reimburse COBRA premiums if coverage was wrongfully denied.
- Cover attorney fees and legal costs if the employee prevails.
Class Action Lawsuits
If multiple employees were denied COBRA coverage, they may file a class action lawsuit, potentially leading to substantial damages for the employer.
Can I Sue My Employer for Not Offering COBRA?
Yes, if your employer has failed to provide COBRA coverage, you have legal options. Here’s what you should do:
Confirm COBRA Eligibility
First, verify whether your employer is required to offer COBRA. You are eligible if:
- Your employer had 20 or more employees during the previous year.
- You were enrolled in the group health plan before the qualifying event.
- You experienced a qualifying event that led to coverage loss.
If your employer is exempt (e.g., a small business with fewer than 20 employees or a federal government entity), you may still be covered under state continuation laws (sometimes called “mini-COBRA”).
Request COBRA Coverage in Writing
If you did not receive a COBRA notice, send a written request to your employer’s HR department or benefits administrator. Employers are required to respond promptly.
File a Complaint with the Department of Labor (DOL)
If your employer ignores your request or refuses to comply, you can file a complaint with the Employee Benefits Security Administration (EBSA) under the U.S. Department of Labor.
- Visit www.dol.gov/agencies/ebsa to file a complaint.
- The DOL may investigate and impose penalties on your employer.
Seek Legal Action
If your employer still refuses to comply, you may file a lawsuit in federal court. A successful lawsuit may result in:
- Reimbursement of out-of-pocket medical expenses
- Reinstatement of COBRA coverage
- Compensation for financial losses
- Employer penalties and legal fees
You may want to consult an employment attorney experienced in ERISA and COBRA litigation to assess your case and pursue damages.
What Evidence Do I Need to Sue?
To strengthen your case, gather the following evidence:
- A copy of your employer’s health plan policy
- Proof of employment and qualifying event
- Any correspondence with HR or benefits administrators
- Medical bills incurred due to loss of coverage
- Any previous COBRA notices received (if applicable)
How Long Do I Have to File a COBRA Lawsuit?
COBRA lawsuits are typically subject to ERISA’s statute of limitations, which varies by state but generally ranges from 1 to 6 years. It is advisable to act as soon as possible after discovering your employer’s failure to comply.
Conclusion
If your employer fails to provide COBRA coverage, you have legal rights to hold them accountable. Employers who violate COBRA laws can face federal fines, lawsuits, and financial liability for medical expenses. Employees denied COBRA coverage should first attempt to resolve the issue directly with their employer, then escalate by filing a complaint with the DOL or seeking legal representation.
If you are facing financial hardship due to an employer’s non-compliance, consulting an attorney may be the best course of action. Legal professionals can help recover damages and ensure that employers meet their obligations under COBRA.
By knowing your rights and legal options, you can take action to protect your health coverage and financial well-being.