The penalties for not complying with the COBRA law are listed below:
- The IRS can charge you $100 tax per day of noncompliance per person or $200 tax per day per family.
- If the IRS has chosen to audit you and you have not corrected the violation, it is possible that you could have a $2,500 fine per beneficiary or the daily tax listed above. The lesser of the two penalties would generally be what is fined.
- If the violation is determined “more than trivial” by the IRS, the company could face up to a $15,000 fine.
- You cannot be charged a fine of more than $500,000 annually or 10% of the past year’s total health care costs.
- The employees along with the beneficiaries have the right to sue to cover the medical expenses that would have taken place when the COBRA should have been offered. During lawsuits regarding COBRA, the court is permitted to charge the employer the attorney fees if the employee’s party has won the case. If the violation is corrected within 30 days and proven unintentional, the penalties could be lessened.
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