cobra compliance

COBRA stands for Consolidated Omnibus Budget Reconciliation Act and was created to help workers and their families by providing them with continued health benefits coverage after a major life event. Major life events could include situations such as when a worker has lost their job when a worker moves to a new location for a new job when an employee is going through a divorce, or even if a worker has had their hours reduced.

Additionally, for some employers, the COBRA Act requires them to provide certain levels of continued medical coverage for employees in these certain situations. This requirement is known as COBRA compliance. Generally, only employers with twenty or more employees are required to provide coverage, with part-time workers representing a fraction of a worker in the calculation. Employers who fall under this category are responsible for guaranteeing benefits for those employees, although the length of those benefits can drastically differ depending on the reason behind the employee’s departure. On top of this, employers are required to notify insurance beneficiaries of the start of their benefits within a set timeframe, as well as any notice of termination of those benefits.

How does the cobra insurance work?

COBRA insurance benefits can differ significantly between different employees and situations and the extent of coverage depends a lot upon their circumstances. Generally, COBRA insurance works by providing employees with insurance benefits while they are experiencing a “life event,” such as the examples listed above. This means that employees unable to work are still able to access their health insurance plan benefits.

However, as also mentioned previously, this depends on the circumstances of their employment or termination. Employees subject to termination are typically only extended benefits for a period of hours or days, while those taking emergency leave can usually use their benefits for periods of months to years. Those covered under COBRA plans can continue care under their preferred providers (in-network) as well as be covered from any pre-existing conditions.

What does Cobra eligible mean?

In short, COBRA eligible means an employee has qualified to receive continued benefits from the employer’s health insurance plan due to various circumstances. For the most part, if an employee was previously enrolled in health insurance coverage in your company for at least one day, then the employee is likely eligible for continued coverage. This can apply to employees who both voluntarily and involuntarily left their job. If your company has the equivalent of 20 or more full-time employees, they are legally required to provide employees with COBRA coverage in these instances.

Who enforces cobra benefit compliance?

There are several government entities that are responsible for overseeing the availability of COBRA benefits for employees and have mechanisms to enforce compliance if necessary. These government entities include the U.S. Department of Labor, the Internal Revenue Service (IRS), and the Department of Health and Human Services (DHHS), and each play a role in monitoring potential COBRA benefit violations.

What situations represent non-compliance with the federal law, cobra?

There are several ways where businesses can be in non-compliance with federal COBRA laws. For example, the business could have the equivalent of 20 full-time employees but could try and avoid incurring extra costs by not offering COBRA benefits to employees. In other ways, the employer could offer benefits, but not notify the effected employee within the acceptable timeframe for notification. They could also be in non-compliance by terminating an employee’s benefits early or failing to provide benefits to someone leaving employment with the company.

What happens if a company is not in compliance with the cobra, including fines?

Each of the above listed of these federal institutions can deliver a fine to any non-compliant business for $110 per violation per day, where each violation represents a person who should have received benefits. The IRS can also implement higher tax fees should these violations not be swiftly corrected. In the event of a company unintentionally making COBRA violations, fines cannot exceed $500,000 if they are reasonable in nature. In this event, the IRS can give the offending business a 30-day grace period to address any violations without paying fines.

What benefits are eligible for Cobra?

For the most part, any benefits considered ‘medical care’ qualify for COBRA benefits. This includes physician care (primary care included), surgery, prescription medication coverage, vision care, dental, and most general in/out-patient work.

How long does an employer have to provide Cobra?

The timeframe an employer has can depend wholly on the circumstances. For employees terminated from work, benefits generally are extended between 18 and 24 hours. However, employees dealing with serious life events may qualify for extended coverage, sometimes between 18 and 36 months.

Employers who have questions about whether their company is complying with COBRA should not hesitate to reach out to the attorneys at MBM Law. We can work with your business to ensure that your company is COBRA compliant.

Michael L. Brungo

Michael Brungo is a partner with MBM and has over 35 years of experience working with businesses, corporations, and public entities with their personnel and employment issues. He is available to help with any type of employment‐related legal matter.