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  2. Getting Started With COBRA
  3. Employer Penalties

What are the penalties if our company has failed to comply with the COBRA law?

We may not have sent a notification out in time. What are the fines for a business who doesn’t comply with COBRA?

The employer penalties for not complying with the COBRA:

  • 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.

Employer Responsibility For COBRA

COBRA is a federal law requiring allowing workers and families the right to keep their health insurance plan through work, if that insurance would end. Federal law requires this of companies with 20 or more workers. The employer’s responsibility to COBRA includes sending notifications, managing enrollment and receiving premium payments.

Report Non-Compliance To The Department Of Labor

Department of Labor – 1-866-487-2365
The DOL may
impose fines on companies who do not provide continuation of health insurance per the COBRA law.

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