The IRS recently posted new procedures for auditing COBRA compliance. Pursuant to these procedures, an IRS examiner will request the following documentation:
- A copy of the COBRA procedures manual;
- Copies of standard COBRA form letters sent to qualified beneficiaries;
- A copy of the internal audit procedures for COBRA coverage;
- Copies of all group health care plans; and
- Details pertaining to any past or pending lawsuits filed against the employer for failing to provide appropriate COBRA coverage.
The IRS examiner may also ask for records of qualifying events in the year(s) under examination, records as to how notices and elections were handled, employment tax returns, and/or lists of all enrolled individuals (including spouses and dependent children). You may want to review the IRS procedures (available at Audit Techniques for COBRA Cases) and use them to self-check your preparedness for an IRS audit of COBRA compliance.