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Do you fear COBRA? If not, maybe you should?

Noncompliance with COBRA laws could result in astronomical penalties, legal fees, and other expenses.  Consider this:

  • A maximum of $110 penalty per affected participant or beneficiary per day from the date the noncompliance started.
  • Personal liability imposed on plan administrators.

 It is not unheard of for COBRA violations to cost a company thousands of dollars plus attorney’s fees.  Also an employer could end up paying for their ex-employees’ health coverage if premiums aren’t collected properly. HR staffers and others who administer COBRA in-house can be held personally liable for non-compliance.

That’s the downside of COBRA. The upside? It is an important employee friendly piece of legislation that allows qualified workers to continue health insurance coverage after leaving employment.

However, it is not enough to offer ex-employees the ability to continue coverage.  This information must be communicated on a timely basis, and failing to notify employees on time is what trips up many employers.  How long does an employer have to notify the plan administrator?  How long does the employee have to decide whether to continue coverage? What does an employer do if the ex-employee doesn’t pay their initial premium? Keeping track of timeframes that ex-employees are on is daunting, not to mention you’re dealing with ex-employees.

 When was the last time your COBRA processes were audited?  If you’re using a COBRA administrator when is the last time you updated plan information?

COBRA is extremely difficult to administer and fraught with risk.  Mistakes can happen, and if they do, the responsibility always lies with the employer.

At Van Beurden Insurance Services we partner with a COBRA administrator to alleviate some of the burden COBRA may place on your HR and benefit support personnel.

If you’d like to more about our COBRA administration and other value-added resources, please reach out.

Brad Knerr

Sales Associate | Los Osos