Some COBRA (Consolidated Omnibus Budget Reconciliation Act) Rules for Employers
Employers with at least 20 full-time employees must allow their employees to choose whether to temporarily keep their health insurance through COBRA when employees become unemployed (Masters). The hours of the employer’s part-time employees can be added together “to make a single full-time worker under the law to meet the 20-worker minimum” (Masters). Plans associated with COBRA include “private-sector group health plans” and “plans sponsored by state and local governments” (“An Employer’s Guide to Health Continuation Coverage Under COBRA – The Consolidated Omnibus Budget Reconciliation Act”). Employers must be aware of certain obligations they must fulfill for COBRA or face significant consequences.
Employers must provide COBRA plans to employees with eligible qualifying events. Though, they do not have to provide COBRA to employees unqualified for their health plan, employees that never enrolled into their plan, and employees in Medicare (“What is COBRA? What Employers Need to Know”). They also do not have to provide COBRA to employees terminated due to gross misconduct, where there is a clear “connection between the offense and the employee’s job,” “[the] employee must be able to understand the gravity of the misconduct,” and “[the] offense must be willful” (“What is COBRA? What Employers Need to Know”). Though, the former employee can dispute this type of denial in federal court (“What is COBRA? What Employers Need to Know”). Furthermore, although the former employee may not want COBRA, employers still have to provide this option to his or her “dependents and other qualified beneficiaries” (Masters). On top of the premiums that employees must pay for COBRA coverage, employers can add a 2% charge “to cover [their] administrative costs” (“What is COBRA? What Employers Need to Know”). Employers could even increase their premiums by 150% “for months 18 through 29,” when a former employee lengthens COBRA “due to disability…” (“What is COBRA? What Employers Need to Know”).
Employers can get punished for not following COBRA rules. For instance, employers can receive the DOL’s fines for $110 per day, “[when] a COBRA notice is delinquent…” (“What is COBRA Coverage and How Does It Affect Your Business?” 2018). Employers that do not address their COBRA violations can also receive an IRS’ excise tax penalties, which could be “$100 per day or $2,500 per beneficiary affected by the rule violation – whichever is greater” (“What is COBRA Coverage and How Does It Affect Your Business?” 2018). Employees can also sue employers for not providing COBRA and “[attorney] fees, monetary damages, and medical expenses related to these incidents” could be high for employers (“What is COBRA Coverage and How Does It Affect Your Business?” 2018). In order to prevent these problems from occurring, employers can contact specialists to deal with COBRA administration (“What is COBRA Coverage and How Does It Affect Your Business?” 2018).
Certain employers are obligated to provide COBRA to eligible employees, especially since it provides temporary health coverage until former employees can find another health plan. Employers must comply with COBRA rules in order to avoid fines, penalties, and lawsuits.