COBRA or Consolidated Omnibus Budget Reconciliation Act became a law in 1986. Prior to COBRA, when employees left their companies, the employees as well as any family members that were covered, lost their health insurance right away.

1. Ensuring COBRA Compliance
COBRA or Consolidated Omnibus Budget Reconciliation Act became a law in 1986. Prior
to COBRA, when employees left their companies, the employees as well as any family
members that were covered, lost their health insurance right away. The health insurance
provider is required by law to notify the employee of his rights to continue with the
health benefits under COBRA. COBRA guarantees that employees can still receive health
insurance under the former employers’ group plan for up to eighteen months. However,
the coverage is at the expense of the employee. COBRA is jointly enforced by the Internal
Revenue Service, the U.S. Department of Labour and the Department of Health and
Human Services.
Is your Organization Subject to COBRA?
An organization must have employed 20 or more workers on at least half of the regular
business days in the last calendar year, and the organization must also currently provide
a group health plan, to be subject to COBRA. Group health plans need to include medical
insurance, dental insurance, vision insurance, medical reimbursement flexible spending
accounts, employee Assistance Program and (EAP) that provides more than referrals and
Prescription drug plan.
Is Your Organization COBRA compliant?
If your organization is subject to COBRA, then it is necessary to ensure that it is COBRA
compliant. COBRA Compliance Requirements under TAMRA (Technical and Miscellaneous
Revenue Act) requires an organization to have evidence of COBRA training, written COBRA
procedures along with a manual with instructions, documentation of program design and
program updates and documentation of program monitoring. It is also necessary for
monitoring to be done by a competent, autonomous third party to pass the TAMRA portion
of an IRS audit; all four check marks are essential COBRA Notifications
Benefits of effectively managing COBRA:
Ø Makes certain that all laid-off employees and their families
have coverage
Ø Helps the organization prevent heavy fines
Ø Prevent the organization from having to pay medical claims
from employees who should have been notified of their coverage, but
weren't.
Penalties for COBRA violations could include:
Ø Excise tax penalties of $100 per day ($200 if more than one family
member is affected)
Ø Statutory penalties of up to $110 per day under the Employee
Retirement Income Security Act

2. Ø Civil lawsuits
Ø Attorney's fees and interest
Employers are seeking innovative and cost-efficient employee benefit services to manage
their near-term and longer-term cost curve by focusing on employee health, lifestyle
choices and productivity. It is therefore important to choose a consultant who can simplify
COBRA administration by including services like COBRA notices, premium collection,
support to participants on COBRA issues, Open enrolment support.
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