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Managing COBRA Risk: The Costs of Non-Compliance
The IRS estimates that over 90% of all employers are out of compliance with COBRA regulations. COBRA penalties can cost your company significant losses of time, money and productivity.
The federal government has charged the Department of Labor with responsibility for COBRA compliance. Now that final regulations are published, an active enforcement effort is underway as the government continues to shift
healthcare costs out of the federal budget.
 What is the Risk of Non-Compliance?
Substantial penalties and excise taxes are assessed at $100 per day per violation. The minimum tax levied by the IRS for non-compliance discovered after a notice of examination is generally $2,500 . The maximum tax for
"unintentional failures" is the lesser of 10% of the amount paid during the preceding tax year by the employer for group health plans, or $500,000. In addition, employee/COBRA administrators can be held
personally liable for COBRA non-compliance.
The IRS currently performs over a dozen audit procedures for COBRA compliance, and places the burden of proof of compliance on the company. Unnecessary COBRA claims are costly and often the responsibility of the employer rather
than the insurance carrier. Legal fees, penalties and employee time spent on an audit can be significant.
CobraGuard alleviates these issues by providing you with worry-free, cost-effective COBRA Administration.
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