The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires most employers with group health plans to offer employees the opportunity to continue, temporarily, their group health care coverage under their employer's plan if their coverage otherwise would cease due to termination, layoff, or other change in employment status (referred to as "qualifying events").
COBRA Administration is a complex and often litigious process that demands complete understanding and procedural accuracy. Employers trying to manage COBRA Administration spend thousands of dollars and most are not compliant in the latest regulations. Surveys indicate that COBRA claims average 52% higher than active employee claims! According to the IRS, almost 90% of employers are out of compliance with COBRA regulations. By outsourcing COBRA Administration to Igoe, our clients are confident that all necessary COBRA requirements are being met in a timely manner, with appropriate documentation and data archival.
The COBRA law, though it affects insurance, is AN EMPLOYER LAW. The employer has certain responsibilities under COBRA and the EMPLOYER is liable for COBRA failures. There are financial penalties for not complying with COBRA law and there are several different entities that levy penalties for failure to comply with COBRA law.
- IRS:The Internal Revenue Service penalty is a non-deductible excise tax of $110 per day violation. If there is more than one Qualified Beneficiary in the family, the Internal Revenue Service excise tax is $200 per day.
- ERISA: Since COBRA requirements are part of ERISA, failing to comply with COBRA may subject an employer to an ERISA penalty of up to $100 per day, per violation. This penalty may be levied per Qualified Beneficiary with no family maximum.
- CLAIM PAYMENT: The employer may be required to pay the Qualified Beneficiaries' claims. The employer must MAKE THE PERSON WHOLE by placing the Qualified Beneficiary in the "exact financial condition" they would have been in had they elected the most favorable coverage in light of the expenses incurred.
- COURT LEVIED DAMAGES: The employer may have ADDITIONAL MONETARY penalties levied against him for failure to comply with COBRA law.
- ATTORNEY FEES: The employer may be responsible for any attorney fees incurred by a Qualified Beneficiary for failure to comply with COBRA law.
Outsource to Igoe Administrative Service and ensure:
- Absolute compliance with IRS and Department of Labor regulatory updates and changes
- Reduction of Employer's administrative burden and stress when dealing with ex-employees
- Appropriate notification, premium reconciliation and archiving/storage of all COBRA documentation
- Professional, trained COBRA representatives decrease Employer's liability when managing critical confidential issues and transactions with ex-employees.