COBRA (Consolidated Omnibus Budget Reconciliation Act), enacted in 1985, is designed to support former employees and their families by maintaining health insurance after significant life events like job loss or reduced hours. For many HR professionals, COBRA is just another thing on their long list of to-do’s that can often get overlooked and underestimated. Despite seeming fairly straightforward, COBRA administration can be complex and ever-changing, and it also comes with some serious consequences for non-compliance.

Did you know? The IRS estimates that 90% of employers who self-administer COBRA are non-compliant. That’s a big deal! So how does that happen? Some common mistakes include distributing initial notices via new-hire packets or election notices during exit interviews. Outdated language or failure to reflect recent changes in laws and regulations can also lead to non-compliance. Accepting late payments inconsistently further complicates matters.

Why does it matter? Noncompliance with COBRA comes with a hefty price tag between the penalties from governmental agencies and civil lawsuits from qualified beneficiaries. Different consequences flow from different compliance failures, and, of course, the amount of possible damages awarded in any case will depend on the circumstances of the qualified beneficiary (or beneficiaries) in the case. ERISA (Employee Retirement Income Security Act) and PHSA (Public Health Service Act) provide avenues for beneficiaries to sue for coverage, potentially resulting in substantial damages.

Outsourcing your COBRA administration can really help mitigate these risks and penalties. Medcom Benefit Solutions offers timely, accurate, and compliant COBRA administration, freeing up HR teams to focus on more important initiatives. Trust us to handle your COBRA administration timely, accurately, and in compliance with all applicable laws and regulations. For more info visit our COBRA Solutions page or contact us.