COBRA Compliance Main Menu

 

            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 COBRA RISKS?

  • 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Note: It only takes one incorrect, out-of-date, late or unsent notice to cause a big problem for your company.