What is COBRA and how does it affect my company?
The Consolidated Omnibus Budget Reconciliation Act (COBRA), is a law that provides health insurance coverage for qualified
employees, and their eligible dependents, who have lost coverage due to a qualifying event. Such events include employment
termination, resignation, reduced hours, divorce, death or other loss of eligibility. An employee has a right to continue
insurance coverage under their former employer's group health plan for up to 18 months, as long as the former employee (participant)
pays for the cost of this coverage. If the employee's spouse and dependents were covered during the employment period, their
coverage is also extended at 102 percent of the cost of the premium that includes the total of both the employer and employee
COBRA regulations generally apply to all group health plans, such as medical, dental and vision plans, which are sponsored
by private sector employers with 20 or more employees.
Companies can unknowingly make simple mistakes. Are you sure your organization is completely compliant with the most recent
legislation? Consider these questions:
* Do you provide written notification of COBRA rights to each newly covered employee and each spouse?
* Are you sure that all COBRA notices, letters and forms are properly worded with the most current Department of Labor
(DOL) and COBRA regulations?
* If you were to refuse an untimely election or payment, could you prove that it was late?
COBRA regulations are complex, difficult to interpret and are constantly changing. As a result, many companies fall out
of compliance with COBRA regulations, which can be a costly mistake. The IRS charges noncompliant employers an excise tax
of $100 per day, per qualified beneficiary -- up to a maximum of $500,000. ERISA penalty fines for noncompliance cost plan
administrators an additional $110 per day per event. In addition to these fines, employers may be required to pay for medical
claims not covered by insurance, as well as for litigation fees.
MWA provides you with immediate, reliable and cost-effective COBRA compliance services. We shop the market and find the
most qualified TPA at the best price. Our COBRA administration will ensure that your benefit plans are always in compliance
with applicable laws and regulations.
The most important aspect of COBRA compliance for employers is liability reduction. In addition to the financial burdens
associated with COBRA compliance, there are legal liability concerns as well. Incorrect enrollment procedures and premature
coverage cancellations can result in expensive, time-consuming litigation.
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