some COBRA myths

If you're one of the hundreds of business owners who don't pay attention to COBRA, start focusing. To get you going, here are a few of the most frequent misconceptions.

• "I don't have to worry because COBRA only applies to companies with 20 or more employees." That's true for federal COBRA. But many states have passed laws designed to cover smaller companies, exactly because federal COBRA doesn't. Better check in with your state insurance office.
• "I've beefed up the company health plan to offer more options, but that has nothing to do with former employees on COBRA." Yes, it does. Whatever you offer current employees and whenever you open the plan for enrollment or election changes, you must make the same offer to all COBRA covered employees.
• "The employee who quit told me that he didn't want COBRA coverage, so now I don't have to think about it anymore." Not so. He can change his mind at any time within the election period, usually 44 days.
• "I don't have to offer COBRA because the employee was terminated for 'misconduct.'" Regulations exempt you from offering COBRA benefits to employees who leave for reasons of "gross misconduct." But the law does not define that term. Financial irregularities have met the bar for "gross misconduct" in past rulings, while incompetence, violations of confidence and resignations have not. Do you want to slug it out in court?
• "I don't want to get stuck with the bills. The day he misses paying a premium, I'm cutting off coverage." A dangerous policy. Covered employees are permitted to pay premiums within 30 days of their due dates.

There are lots of other mistaken notions about what's permitted or forbidden under COBRA rules. There are also many variations, depending on the employee and your particular plan. The best way to make sure you become compliant — and stay complaint — is to begin the process. Now.