Which of the following is true about the penalty tax per beneficiary?

• A. It applies separately for each qualified beneficiary
• B. It applies per employer
• C. It applies per plan
• D. It applies per state

Answer: (A)

The penalty is assessed for each individual who has COBRA rights affected by a violation. A qualified beneficiary is the person who loses coverage due to a qualifying event and is entitled to elect COBRA (employee, spouse, or dependent). When a failure occurs—such as improper notices or incorrect premium handling—the penalty attaches to each affected beneficiary, so multiple beneficiaries can lead to multiple penalties. This is why the correct choice states that the penalty applies separately for each qualified beneficiary. It isn’t levied per employer, per plan, or per state, because the liability follows the individuals who have COBRA rights rather than the organizations or jurisdictions alone. If two beneficiaries are impacted, the penalty can be assessed for both, effectively doubling the amount.