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Supply Chain Disruptions Lead to Layoffs or Reduced Hours. Layoffs and Reduced Hours Lead to COBRA Considerations.

A single disruptive event in any part of the world could initiate a supply chain nightmare for your company. And disruptions are more common than one might imagine. A recent survey of over 500 companies from 68 countries across 14 different industry sectors conducted by the U.K. Business Continuity Institute revealed that 73% of respondents had experienced a supply chain disruption in the last 12 months.

Potential effects of supply chain disruptions include a variety of potential negative consequence, including:

  • Reduced market share
  • Loss of customers
  • Damage to image, reputation, or brand
  • Decrease in sales and increase in costs, from which many companies never recover

Ultimately, if any of these effects become too large, your company will have to downsize and lay off employees or reduce their hours. Either of these events can be a qualifying event for COBRA.

COBRA administration can be time consuming and potentially hazardous due to the legal ramifications of not being in compliance with the multiplicity of requirements required for each COBRA event. Failure to comply can lead to costly penalties and/or claim responsibility for you as an employer.

Fines and fees could include:

  • IRS excise taxes
  • ERISA – $110/day statutory penalties
  • Participant lawsuits to compel coverage, plus attorneys’ fees
  • Inability to terminate coverage

At Kapnick, we can help. We have a full range of in-house COBRA administration services. We efficiently handle all aspects of administration, relieving you of the responsibility and providing the resources you need to ensure compliance.

Our services include:

  • Service support
  • Initial notification
  • Qualifying event notification
  • Carrier notification
  • Premium collection
  • Termination notification
  • Premium change
  • Monthly reporting

No one wants to layoff or reduce their employees’ hours, but sometimes circumstances are beyond your control and issues like the current supply chain disruptions occur. When that happens, you need the right experts on your team to ensure a smooth transition for your employees and HR teams.

To learn more, reach out to our auto dealer expert, Ian Burt by email or connect with him on LinkedIn.