COBRA...when does it apply

CPS

We are a small company and have just reached the a point of employing 20+ people.
In all the documentation I have read on COBRA, I understand that
group health plans for employers with 20 or more employees on more than 50%of its typical business days in the previous calendar year are subject
to COBRA.I was planning to deal with COBRA in 2002.
However, my insurance agent informed me that the determination of the # of employees has changed and it is now 20 or more employees on more than 50%
of its typical business days in a rolling 12 month period.
Is this correct??
This very hard to keep up with especially when you also need to work in the fractional inclusion of the part-time employee.
Can someone verify this for me and also point me to where I can find a copy of the regulation changing the time frame to a rolling 12 month period?
Also, the law states the employer must send the initial notification in a timely manner. Does anyone know what constitutes timely in this scenario?
I am concerned about my company's compliance.
Thanks!

Scott Ruth

I am not aware of the change from a calendar year to a rolling year to determine if you have enough employees to be subject to COBRA. The final regulations issued in 1999 and 2001 say a calendar year. The citation is 26 CFR 54.4980B-2 Q&A-5 (available at [url]www.irs.ustreas.gov/prod/tax_regs/index.html[/url], click on Code of Federal Regulations). Most of the recent changes in this area dealt with how you count employees.

You must supply the initial notice when the plan becomes subject to COBRA and then to new persons who become covered under the plan afterwards. I suggest you send it out before you become subject to COBRA, like in December. Many include the notice in the SPD, but remember that the SPD must be sent separately to spouses and dependents to be considered notice to them (you can combine them if you mail it to tham and they have the same address, but handing an SPD to an employee generally won't do it).

I suggest you set up a meeting with your insurance carrier and their COBRA experts to hammer out compliance, especially who will be responsible for things like mailing out notices, etc. Document your discussions and seek independent legal advice if things don't sound right.

cedupree

I attended a COBRA seminar last year that was awesome! In their handouts they showed samples of the general notice and election notice. We didn't realize that a general notice was required prior to that seminar. If you want a copy to go over with your agent, lawyer or other representative, let me know.

Mikki H

We decided to use an outside source for COBRA compliance. We still keep up on all of the regulations, however, for notices etc. there is very little we need to do. In most cases, all we do is notify when we have a new insurance enrollee and when we have a qualifying event. Very rarely do we have a person who elects, and that would generate another contact with the company. Some companies even do the premium collection. We found that it has been cost effective for our company.

Gillian

Ditto to the message about a third party to handle the paperwork. Many employers avoid all the headaches by delegating the administative portion of COBRA. Your insurance broker should be able to recommend a firm in your area.