Problem:

Large staffing agency with 875 W-2 employees was offering benefits only to internal administrative staff. Company was not offering COBRA to their terminating employees on the advice of their current broker/agent believing that because their internal staff numbered less than 20, they were not required to offer COBRA. Penalties for COBRA Non-Compliance:

• IRS is $100 per day, per Qualified Beneficiary, excise tax
  assessed against the employer up to $255,000 maximum.
• Annual employer aggregate maximum tax equal to lesser of $500,000 or 10% of the prior calendar year group plan costs.
• ERISA: $110 per day per event penalty assessed against the plan administrator.
• Payment of any related medical claim (the insurer is probably under no obligation to pay a related medical claim due to employer negligence).

Solution:

Braden Benefit Strategies, Inc. provided authoritative documentation by contacting the trade association respected by this account and in which the account was a participating member located in Washington D.C. Documentation that the company did have an obligation to offer COBRA to their terminating employees in this unique situation was provided and the company policy was changed to make COBRA coverage available.

Results:

Company signed an Agent of Record letter making Braden Benefit Strategies, Inc. their benefits broker. We instituted a COBRA process and the account is no longer liable for what could have been over a $1,000,000 in potential lawsuits and Department of Labor audit due to being in compliance.