COBRA: Employer Responsibilities and Penalties

Cobra Employer Responsibilities:

Some of the Employer responsibilities are:

• Notify employees and covered spouses of their COBRA Rights when they first become covered under the employer's health plan(s).



• Notify employees and/or covered dependents, within 14 days of the COBRA Qualifying Event date, of their ability to elect COBRA continuation of coverage and provide election forms.



• Maintain records to prove notifications were sent within their specified timeframes.



• Track COBRA election periods and length of coverage.



• Invoice COBRA premium payments and balance bill short payments.



• Maintain payment records and correspondence.



• Notify COBRA continuants of benefit changes and any open enrollment periods.



• Allow COBRA continuants the ability to add dependents, increase coverage, or change plans as "similarly situated" active employees are allowed to do.



• Notify active COBRA continuants of their conversion rights, if any, within 180 days of their projected COBRA coverage termination date.



• Notify COBRA continuants when their COBRA coverage has terminated.



• Maintain written procedures for COBRA administration.

Cobra: Employer Penalties

• IRS excise tax penalty of $100 per day for each violation. This fine can be increased to $200 for each day in which there was more than one Qualified Beneficiary per family.



• An ERISA penalty of $110 per day payable to each Qualified Beneficiary for each day the employer was not in compliance.



• The employer can be held liable for payment of legal fees, court costs and even for medical claims incurred by a Qualified Beneficiary.