Many employers are aware of the requirements for administering COBRA (the Consolidated Omnibus Budget Reconciliation Act), but few are prepared to deal with the financial repercussions of noncompliance. In fact, the simplest of mistakes can lead to lawsuits with massive financial rulings that can include penalties of up to $110 per day per person, and in some cases, court awarded litigation fees.
Employers are required to provide COBRA notices to plan participants in numerous situations. But while the guidelines for administering COBRA are fairly transparent, it’s often the incomplete details of a COBRA notice that can land an employer in hot water. Mistakes as small as not listing the name and contact information for the COBRA administrator can constitute noncompliance and trigger a lawsuit. Even when using the Department of Labor’s (DOL) COBRA model notices, required fields are often completed incorrectly or skipped by mistake.
These small deficiencies can be present in notices for an entire group of employees, which would incur penalties of $110 per day per person for as long as the mistake has been outstanding. For example, a COBRA notice sent to a group of 100 participants is found to be noncompliant after 100 days, which constitutes a total penalty of $110,000, plus potential legal fees awarded by the court.
Fortunately for employers, BASIC specializes in compliance. For over 30 years, BASIC’s proven administration model and industry certified experts have helped employers of all sizes across the United States remain compliant and avoid devastating legal payouts. Our superior technology and best-in-class employer tools allow us to exceed DOL notification timeframe guidelines and drastically reduce an employer’s risk. And since COBRA compliance can be complicated when administered correctly, outsourcing COBRA to BASIC frees up valuable time and energy that is better spent managing your active employees.
Don’t become another COBRA lawsuit headline. Request a proposal for BASIC COBRA Administration today!