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Employer Violated COBRA When Hours Reduction Hiked Premiums
HR Daily Advisor
Jan. 29, 2015
"The fact that the reduction in hours resulted in an increase in their premiums constituted a 'loss of coverage' for COBRA purposes. Also, the employer's disclosures were inadequate in explaining this outcome. This resulted in both a COBRA notice failure and a breach of fiduciary duty under ERISA.... Here, the two individuals had to pay 100 percent of premiums once they were suspended -- prior to that, they only paid 5 percent and 18.5 percent of the premium, respectively. This increase of premiums was a loss of coverage for COBRA purposes that was a direct result of their reduction in hours, the court found."
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