In response to the many recent regulatory changes as a result of the Affordable Care Act...have your obligations to former employees, employees who are eligible for Medicare, or dependents who have aged out of medical coverage changed? Now What? Yes, they're gone, but not forgotten...or, at least they shouldn't be.
If you're already familiar with the requirements for supplying "notices" of one type or another to new hires, terminated employees, employees having "status" changes, etc. than you understand just how much frustration and work can be involved in keeping up with the requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985/1986, or "COBRA". The mere "word" brings to mind the vision of a coiled, ever vigilant predator ready to strike; an analogy that is not far from reality in light of the severe consequences and penalties that can "bite" employers for failure to comply properly.
What is your potential penalty & tax "bite"? Department of Labor (DOL)/Employee Retirement Income Security Act of 1974 (ERISA) penalties of $110 per day are assessed for each employee, spouse, and dependent that does not receive one of several required notices within the defined time period, which varies by type of notice. In addition to the DOL/ERISA penalty, a "non-deductible" excise tax of $100 per day, per violation for each qualifying beneficiary (employee, spouse, dependent child) is levied by the Internal Revenue Service (IRS) subject to daily "caps" and not to exceed the lesser of $500,000 or 10% of an employer's preceding year's total cost to provide group health coverage. If that isn't enough...the above expenses for COBRA violations can be compounded with the possibility of State & Local assessments, the requirement to pay "claims" of qualified beneficiaries "making them whole" in the eyes of the law, paying awarded "damages" and attorney's fees from lawsuits, and the probability of DOL audits.
Without a doubt the cost of Non-Compliance is HIGH; however, the costs to comply with the requirements of the law can be equally high considering the labor and time involved in learning the requirements and providing the following schedule of "notices"...
|Required Notice:||To Whom Given:||Required Timeline:|
|Summary Plan Description (SPD)||New Hires (FT & FTE) / All Employees (Annually)||Within 90 days of eligibility for the plan|
|General Notice, a.k.a. Initial Notice||New Hires (FT & FTE)||Within 90 days of eligibility for the plan|
|Qualifying Event (QE) Notice (Employer-Initiated)||
Group Health Plan Provider &
Third-Party Administrator (TPA)
|Within 30 days of applicable event|
Qualifying Event (QE) Notice
|Employer||Not less than 60 days from the QE or a Qualified Beneficaries' advisement of the requirement to provide a notice|
|COBRA Election Notice||Plan Participants & Qualifed Beneficiaries (QB)||Within 14 days of being notified|
|Summary of Material Modifications (SMM)||Plan Participants & Qualifed Beneficiaries (QB)||Within 60 days after reduction in benefits is adopted|
|Employee/QB Requested SPD/SMM||
Requesting Employee &
their Qualified Beneficiaries
|Within 30 days of request|
|This is intended only as an "overview", not to provide exact requirements. ♦ Learn more @ http://www.dol.gov/ebsa/publications/cobraemployer.html|
If trying to understand all the acronyms of COBRA, i.e. QBs, QEs, SPDs, ERISA, DOL, SMMs, TPAs, FTEs is frustrating...or more importantly, keeping up with the sending of all required notices for employee status changes (reduction in hours), their rights and responsibilities when they become Medicare eligible, employee terminations - other than for gross misconduct, or the Qualifying Events you are notified of from Qualified Beneficiaries, such as divorces or legal separations, dependent children loss of eligibility due to age changes, or the death of a covered employee...
RELAX...We can do it all for you..."cost effectively & confidently".
Alliance Insurance Group's COBRAConfidenceSM process is proven.
Download our brochure to the left, and give us a call to discuss your specific needs.