If you are an employer of 20 or more employees and you offer health insurance, it is federal law that requires you to also offer COBRA when employment is terminated.
Neglecting to offer COBRA could mean you will have to offer coverage retroactively.
Impact to Employers: Penalties & Risks
“When an employer subject to COBRA fails to provide timely election notice, while COBRA does not specify penalties, penalties do arise under the Internal Revenue Code (the Code) and ERISA. At the discretion of the courts, the employer can be subject to a $100 excise tax for each day the notice is late (or $200 per day if more than one person is affected, i.e. a spouse or dependent) and a $110 per day penalty under ERISA. An employer can avoid the Code’s excise tax penalty if the failure to notify the employee is due to a reasonable cause and not willful neglect and is corrected within 30 days from the date the failure was discovered,” according to Horan.
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