How You Can Avoid Walmart's Class Action COBRA Problem

According to a recent class action lawsuit, Walmart is the latest large company to fall victim to an HR mishap. A former Walmart employee claims the company failed to include key information in their COBRA notices following a pandemic layoff. Though Walmart complied with COBRA’s mandatory notice requirement, they did not mention the employee’s rights to subsidized premiums under ARPA. Not including this information could cost laid-off Walmart employees hundreds of dollars in health insurance premiums out of their own pockets. This is just another example of how even big corporations can fall short regarding keeping up with HR compliance.

This mistake could end up costing Walmart big time. Penalties for violating COBRA laws can be up to $110 a day, and there could be upwards of 100,000 Walmart employees who were affected.

Even if your company is fortunate enough to avoid layoffs like Walmart’s, it’s always wise to be prepared for the unexpected. Here’s how BerniePortal can help you stay compliant throughout the employee lifecycle.

What Is COBRA?

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a set of laws put into place by the Department of Labor (DOL) in order to protect employees from the possibility of losing health insurance coverage.

Under COBRA, employers with a group health plan and 20 or more full-time employees must offer a continuation of group health insurance coverage to qualified beneficiaries for a limited period of time. Employers have 45 days after an employee’s insurance ends to notify them of their rights to continued healthcare coverage under COBRA.

What Is the American Rescue Plan Act (ARPA)?

The American Rescue Plan Act of 2021 (ARPA), which was first announced in January 2021, was a relief package and culmination of President Biden’s efforts to pass legislation designed to assist Americans and industries that the pandemic has negatively impacted.

During the height of the pandemic, the government rolled out a rescue plan to help Americans fight the financial effects of COVID-19. Part of ARPA included government subsidies for insurance premiums until September 30, 2021. This included insurance premiums for laid-off employees who continued healthcare with their employer through COBRA, and employers were required to include ARPA information on all notices.

How Can BerniePortal help?

Whether an employee leaves voluntarily or involuntarily—or your company is faced with the hard decision to implement layoffs—offboarding is never an easy process. BerniePortal can help streamline offboarding and ensure your company is staying compliant each step of the way.

BerniePortal allows employers to set up offboarding checklists that are assigned when the employee’s account is terminated. These checklists can contain logistical reminders, such as deactivating key cards, and compliance reminders, like sending COBRA notices. All checklists are customizable to your company’s offboarding procedure.

These reminders will help HR send out necessary compliance information to each terminated employee, avoiding a hiccup similar to Walmart’s.

If your company foreshadows an uptick in employee turnover, it may be smart to look into a third-party administrator (TPA) to help you administer COBRA notices and payments. Our sister company, Alpine, is the exclusive COBRA TPA for BerniePortal and actively works with both employer and broker clientele. They work to ensure all past, current, and future COBRA members eligible for the subsidy know how to take full advantage of it. Read more on how Alpine can help your company regulate COBRA.

Thinking Ahead

No company wants to imagine itself in the shoes of bigger companies, like Walmart, facing big HR mishaps that can be extremely costly. However, it’s important not to turn a blind eye to the possibility and double-check that all compliance procedures are working as they should. Using an HRIS, like BerniePortal, is a great tool to help HR teams stay organized and compliant, even during times of uncertainty. See a demo of BerniePortal today.

Additional Resources

You can stay informed, educated, and up to date with important HR topics using BerniePortal’s comprehensive resources:

BernieU—free online HR courses, approved for SHRM and HRCI recertification credit
BerniePortal Blog—a one-stop shop for HR industry news
HR Glossary—featuring the most common HR terms, acronyms, and compliance
Resource Library—essential guides covering a comprehensive list of HR topics
HR Party of One—our popular YouTube series and podcast, covering emerging HR trends and enduring HR topics