An employer must have documentation that all active employees were notified at home about their rights and beneficiary rights upon loss or reduction in coverage. If there is no proof of this notice, than there is an obligation of the employer to provide coverage to a Cobra eligible beneficiary even if that beneficiary elects coverage after the 60 day grace period. The proposed regulations also deal with Section 125 Spending Accounts . The most critical decision mandates that the employer must allow the employee to continue the flexible spending account until the end of the plan year, but no further. This isn't so bad because it allows the employer to recoup some of its dollars should the employee continue to contribute.
Someone is responsible.
The buyer and seller must come to an agreement in the purchase agreement whenever ownership is transferred or changed. If responsibilities are not fixed by the purchase agreement, then there are default rules which apply. The variations of the rules are too complicated to discuss here. But, the IRS is making it clear, that beneficiaries won't lose coverage. We recommend that every employer outsource its Cobra compliance issues from initial notifications through sending out Cobra notifications upon qualifying events.