COBRA penalties

[Guest rmulchaey]

If we failed to send a COBRA notice and do not realize the mistake until after the benificiary is no longer entitled to COBRA benefits, should we send a late notice? In addition, are we liable for penalties up to $110 per day for the time until notice is actually sent or only for the time period the beneficiary is entitled to COBRA benefits?

[mroberts]

Yes, send a notice late and see if he/she wants coverage. Chances are, the employee is not going to elect coverage since only a handful of COBRA eligible actually make the election. If the employee decides to elect medical continuation, you then must decide on how you want to handle the premium payments. How long past 60 days are you? If it's anything significant, I would suggest allowing the employee to split the costs over an extended period of time or to actually eat some of costs yourself since the problem was on your end.

The $110 fine per day could be levied for each day you were out of compliance, however, I wouldn't worry about it too much. Most courts aren't going to enforce the maximum unless you wontonly disregarded an employee's rights. Additionally, as long as you and the employee come to an agreeable resolution, you probably won't get fined at all since there really aren't any ERISA police out there. Where the fines start coming in is when an employee takes you to court.