The IRS estimates that about 90% of employers are out of compliance with Cobra regulations. The Department of Labor (DOL) and the Internal Revenue Service (IRS) each have authorization to independently assess penalties for COBRA noncompliance. As an employer, you must properly implement federally-mandated procedures for COBRA administration.
What are the COBRA non-compliance penalties?
- $100 a day fine payable to the IRS for non-compliance per day per violation
- $110 a day fine payable to the Qualified Beneficiary under ERISA per day per violation
- Legal expenses
- Other judgments, costs or damages
The burden of proof of compliance is placed on the company and can be time consuming and expensive. Employers will want to ensure procedures are setup internally to monitor Cobra. Hiring a Third Party Administrator such as Cobra Administrators can help ensure you are Cobra compliant.