COBRA Q & A
WHAT IS COBRA?
COBRA is a complex law that
requires employers to offer continuation of coverage to covered persons
who lose their various medical coverages due to loss of employment,
reduction of hours, divorce, or loss of dependent child status.
WHO MUST COMPLY?
All employers who had 20 or more
employees on 50 percent of its typical business day during the
preceding calendar year.
WHAT ARE THE
Lawsuits by former employees
and their dependents to pay their uncovered medical bills which can
also incur large punitive damage awards. After the 60 day employee
election period passes the insurance company may or may not pay the
claim. Additional costs can include attorney’s fees and burden on
staff while preparing defense.
Harsh IRS fines which can
reach hundreds of thousands of dollars for being out of compliance
which can be uncovered during an IRS audit or reported by a
disgruntled present or former employee.
Note: It only takes one
incorrect, out-of-date, late or unsent notice to cause a big problem
for your company.