Penalties for Failure to Comply with COBRA

  • The IRS may assess excise tax penalties of $100 per day (up to $200 per day if more than one qualified beneficiary from the same family is affected) for each day a plan fails to comply with COBRA.210
  • For single employer plans, the overall limit on the liability for excise tax penalties for failures due to reasonable cause (and not willful neglect) is $500,000.211
  • Qualified beneficiaries may sue to recover statutory penalties of $110 per day for a plan’s failure to provide him or her with the General Notice or the COBRA or Election Notice.212
  • Qualified beneficiaries can sue to recover COBRA coverage allegedly due under the plan. In these cases, the employer, Plan Administrator or the insurance company can become obligated to provide COBRA coverage.
  • Other relief may be available to qualified beneficiaries based on a plan’s failure to provide him or her with the General Notice or COBRA Election Notice.213
  • The Court is permitted in a COBRA lawsuit to award attorneys’ fees and interest to the prevailing party.214

CREDITS: This is an excerpt from An Employer’s Guide to Employment Issues in Minnesota, provided by the Minnesota Department of Employment and Economic Development & Linquist & Vennum P.L.L.P., Tenth Edition, 2009. Copies are available without charge from the Minnesota Department of Employment and Economic Development, Small Business Assistance Office.

This post is also part of a series of posts covering the Continuation of Group Health and Life Insurance Coverage Law (COBRA). This information is not legal advice. You should consult with an experienced employment attorney before dealing with COBRA-related employment issues.

210 26 U.S.C. § 4980B(b)(1).
211 26 U.S.C. § 4980B(c)(4).
212 29 U.S.C. §§ 1132(a)(1)(A), 1132(c)(1)(A); 29 C.F.R. § 2575.502c-3.
213 29 U.S.C. § 1132(c).
214 Minn. Stat. § 62A.17, subd. 2 (2010).