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Should our company Outsource COBRA Administration?

The IRS estimates that over 90% of all employers are out of compliance with COBRA regulations, which have been amended twelve times since its enactment on April 7, 1986. 


Liability for Non-Compliance

IRS Excise Tax: The excise tax penalty is $100 per day for each qualified beneficiary ($200 per day if more than one family member is affected). The minimum tax levied by the IRS for noncompliance discovered after a notice of examination is generally $2,500. The maximum tax for “unintentional failures” is the lesser of 10 percent of the amount paid during the preceding tax year by the employer for group health plans, or $500,000.

DOL ERISA Penalties:Employer is liable up to an additional $110 per day for each qualified beneficiary separate from any other judgments, damages or attorney fees imposed by the courts against the employer. Any fiduciary can also be held personally liable for non-compliance under ERISA. 


Eliminate the liability and costs associated with COBRA administration.


The Challenge: An organization of 225 employees was unsure whether they were following the “rules” and using the right forms to administer COBRA. Having to collect money from former employees to prevent termination of coverage put the client in a very uncomfortable position. Cambridge introduced a single, web-based interface that allows HR to update employee eligibility across carriers and benefit lines. 

The Result: This client no longer worries about notifications, communication, and billing and payment process that are now handled directly with the COBRA participant. The employer is also thankful to be out of the “collections” business. 



  • Customized employer implementation plan for takeover of existing COBRA participants
  • Notification of COBRA rights to qualified beneficiaries
  • Tracking of election and premium payment periods
  • Processing of elections
  • Direct participant billing of COBRA premiums
  • Collection of COBRA payments
  • Termination and/or conversion notices to qualified beneficiaries
  • Revisions as required by COBRA law changes


Cambridge can help you eliminate the burden of in-house COBRA administration and its associated costs. Our simplified and hassle-free solutions are fully automated. We make your life easier by eliminating the routine maintenance functions that are often time consuming and onerous for employers.

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