While it is not required that employers use the model notices, doing so should serve as a "safe harbor" against challenges for improper notices to qualified beneficiaries. This is especially relevant as there has been a significant increase in the number of individual and class action lawsuits filed against employers for failing to provide adequate COBRA notices. The COBRA statute provides for penalties of up to $110 per day per qualified beneficiary for failure to comply with these notice requirements and plaintiffs are aggressively seeking these penalties. For example, if an employee with a spouse and two children is terminated and thus becomes COBRA eligible, that employee may attempt to prove that he did not receive a compliant COBRA notice. If 90 days go by the penalty could be $39,600.
While many employers outsource their COBRA administration to third-party service providers, the liability for COBRA compliance rests with the sponsoring employer. With the release of new model notices and the uptick in COBRA litigation, now is a good time for employers to review all of their COBRA policies and procedures, as well as their administrative service agreements with third-party service providers.