Are You Required to Offer COBRA Coverage?

The IRS recently finalized the rules that spell out when employers are required to offer COBRA coverage to former employees. COBRA refers to the 1985 federal employment law that guarantees certain ex-employees and their families the right to purchase continuation health coverage for at least 18 months after they leave your company.

Generally you must provide COBRA coverage if you offer group health coverage, and you employed the equivalent of 20 or more full-time employees on a typical day in the previous business year. While this test seems simple enough, the calculation is more complex if you employed part-time workers.

The new rules take a more lenient approach to the way part-time employees count toward this 20-employee test. Now it is easier for small employers to do some planning to keep themselves within the small employer exception.

Even with IRS clarification, the COBRA rules remain complex. For example, your company may be exempt from COBRA under federal law, but many states have adopted laws that are more restrictive than federal law. Employers that fail to comply with COBRA requirements face government penalties, as well as possible litigation from former employees.

If your company offers group health coverage to your employees, you should be aware of the COBRA rules.

Related Information:
        Ideas and Information About Business

© Copyright 2001 Raymond S. Kulzick. All rights reserved. 010601.