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Benefits, vacation pay, sick time, unemployment compensation

COBRA eligibility and employer notification duties: Employers are legally required to notify exiting employees of their COBRA health care coverage. Failure to do so triggers fines and penalties.

COBRA applies only to private-sector employers with 20 or more employees and a group health insurance plan. If your business employs fewer than 20 workers or does not offer its employees health care coverage under a group plan, you have no responsibilities as an employer under COBRA. Keep in mind, however, that COBRA counts part-time worker equivalents, which means that it will combine the hours of two or more part-time workers to make a single full-time worker under the law to meet the 20-worker minimum.

As an employer, you are responsible for notifying your former employee of the right to elect COBRA continuing health care coverage under your group plan. Most employers will include COBRA coverage information in the business employee handbook and as part of an employee’s exit paperwork. However, the law sets specific time periods for additional formal notifications. For example, an employer must notify its health insurance plan administrator of the employee’s COBRA eligibility within 30 days of the employee’s last day at work. The plan administrator then has 14 days in which to notify the employee of the right to elect COBRA coverage. The Department of Labor fines employers $110 for every day that a COBRA notice is delinquent. Also, the IRS can assess a penalty tax against employers that do not comply with COBRA notification rules.

Pamela A. Smith
Law Office of Pamela A. Smith
233 Needham Street, Suite 540
Newton, MA 02464
617-969-2900

pam@pamsmithlaw.com

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