As an employer that offers employee benefits, you are subject to the COBRA rules and regulations as enforced by the IRS and the Department of Labor. Keeping up with the myriad requirements as well as multiple deadlines can be difficult and a drain for any size business.
COBRA compliance mistakes can be completely unintentional but could cost an employer large fines or lawsuits. Choosing to administer COBRA on your own is a HIGH RISK, LOW REWARD decision.
Fines for COBRA non-compliance can be costly.
IRS and DOL penalties are applied to EACH instance of a compliance issue, which means they can quickly add up for every incorrect letter or missed deadline. The IRS has a maximum penalty of $500,000 per year!
In addition to the above fines, employers with compliance issues open themselves up to lawsuits from former employees and can be held liable for paying for a qualified beneficiaries medical claims.
Most employers do not have the infrastructure or resources to keep up with and administer all the COBRA requirements such as required notices, election and payment deadlines, late and partial payments, different coverage periods, changes to plans options, address changes and terminations of coverage, as well as Open Enrollment for qualified beneficiaries.
Employers who choose to do their own COBRA often do so manually, with no administrative system to support them which further increases their risk of non-compliance. Employers that recognize this risk CAN buy their own software but for most small businesses, the cost of best-in-class COBRA administration software costs more than the outsourcing model.
COBRA law is not immutable. It has and will change over time. The additional burden on employers to keep up with these changing regulations normally falls exclusively to a company’s HR team. Choosing an outsourcing partner to administer your COBRA will free up your internal resources to focus on the needs of YOUR business.
Many qualifying events such as reduction in hours, being laid off, or separation of an employment, whether voluntary or not, can lead to emotional, difficult situations. Third party administrators ensure fairness and compliance by strictly enforcing rules and regulations while supporting the participant throughout the process which helps avoid conflict and protects the employer.
Outsourcing your COBRA Administration and partnering with COBRA Allies is a LOW RISK, HIGH REWARD decision and you can rest easy that your compliance to the regulations is being handled by experts. We are in this business to help you focus on what YOU do best, while we do the same. Ultimately, this decision will lower the burden on your HR team and reduce your costs.
You have found an Ally!