Are There Potential Penalties for Plan Sponsors that Fail to Provide the New COBRA Premium Subsidy Notice?
Failure to provide this new additional notification is treated as a violation of the general COBRA notice requirements. The Tax Code imposes an excise tax of $100 per qualified beneficiary, per day of noncompliance that can be imposed on an employer or plan administrator for failing to meet this and other COBRA requirements. If there is more than one qualified beneficiary involved in the same qualifying event (for example, an employee and dependents), then the daily maximum excise tax on all failures on any day during the noncompliance period concerning all of those qualified beneficiaries is $200. However, the IRS may also waive part or all of the COBRA excise tax, if the failure to satisfy the COBRA rules is due to reasonable cause and not willful neglect. In addition, under the federal benefits law (the Employee Retirement Income Security Act of 1974, as amended, or “ERISA”), a federal court has the discretion to impose a $110 per day penalty for each violation of the COBRA notice r
