What are the sanctions for failing to comply with COBRA?
An employer is assessed a tax of $100 per day for each failure properly to notify a qualified beneficiary of his or her COBRA rights. (The tax for failure with respect to family coverage is $200 per day per family.) The noncompliance period may extend six months after the date on which the continuation coverage could be terminated. For example, if an employee is terminated and the employer fails to provide the COBRA notice, the noncompliance period is 24 months (18 months continuation for terminated employees plus six months). Under certain circumstances, a third party that administers the health plan for the employer may be held liable for this tax. No excise tax is assessed if the failure is not the result of willful neglect and is corrected within 30 days. In addition, there is an aggregate dollar limit on the tax when the failure has a reasonable cause. This limit is equal to the lesser of 10 percent of aggregate cost the employer pays or incurs in providing for health coverage or
