Correspondence is a crucial part of COBRA compliance. If the right notices aren’t sent—or if the necessary records aren’t maintained—costly fees can follow. This doesn’t mean that timely and accurate correspondence needs to be a headache.
Morgan Lewis recently reported that four companies were facing lawsuits over allegations that they had failed to provide the necessary COBRA notices. Such lawsuits can be extremely expensive. In addition to the statutory penalty—which comes to $110 per day—companies may be required to pay damages, attorney fees and tax penalties. In the last two years, settlements have been as high as $1 million.
Employers have been feeling more and more pressure to comply with regulations. In 2016, PLANSPONSOR reported an increase in Department of Labor (DOL) and Internal Revenue Service (IRS) audits.
This means employers must make sure they are sending out all required notices. Individuals who are eligible for COBRA must receive notification of their rights and plan options. As explained in the DOL’s An Employer’s Guide to Group Health Continuation Coverage Under COBRA, required notices include general notices, summary plan descriptions, COBRA qualifying event notices, COBRA election notices, COBRA notices of unavailability of continuation coverage and COBRA notices of early termination of continuation coverage. All of these notices must be mailed out in a timely matter.
In case an audit or lawsuit occurs, employers must also maintain documentation. When sending out notices, it is important to retain proof of mailing.
If this sounds like a lot of work, that’s because it is. Fortunately, the right COBRA software can ensure that all necessary and optional communications are sent on time and with proof of mailing. This way, employers stay in compliance and avoid expensive fees and lawsuits.
Are you confident in your correspondence solution? To learn more, download the Correspondence Checklist: Confidence in COBRA & Direct Bill Correspondence.