What Problems are Likely to Occur if Your Employer Does Not Notify You of COBRA Benefits After Termination?

Your employer is liable to incur a number of penalties if they do not alert you to your COBRA benefits within 30 days of termination. In addition to the amount of $110 per participant that is generally charged on a daily basis to the plan’s administrator (Section 502(c)(1) of the Employee Retirement Income Security Act of 1974), there is also the potential to be charged for damages arising from the failure to provide medical coverage as well as legal costs.

An example of a case stemming from an employer’s failure to provide notice of COBRA benefits is Share v. Panhandle Motor Services Corporation, during which it was determined that the employer was responsible to pay $122,808 for reimbursement of medical expenses as well as $18,151 for attorney fees. The actual failure to provide information concerning COBRA cost the employer an additional $4,035.

Although not relevant to employees, it is important to note that the IRS could levy an
excise tax of an additional $100.00 per day on those not adhering to COBRA guidelines (Section 4980B(b) of the Internal Revenue Code of 1986).