Figurative speaking, I have met a few people that needed someone to buy them a heart because their attitudes and actions didn’t give any indication that they had one. People that truly have a medical need for a new heart are able to get one in our world of modern medicine. Heart transplants make getting a new heart possible. The combination of medical capability and insurance make heart transplants and other amazing procedures available to those that wouldn’t have the money to pay for it. Insurance is the link that makes good health care available to most individuals.

To protect individual’s right to keep their insurance benefits COBRA regulations require employers to allow employees to extend insurance coverage past the end of their employment. Failure to correctly comply with COBRA can be very expensive to an employer. There are two potential high costs to the failure to correctly comply or administrate COBRA benefits.

1. Financial penalties the government assesses to enforce compliance.
2. The potential to “buying a heart” if COBRA isn’t administrated correctly.

The greater risk comes from attempting to comply with COBRA but not doing it correctly. To date, I have yet to find an employer doing COBRA administration themselves internally that is doing it correctly. Thinking they have COBRA handled they expose themselves to “buying a heart.” Financial penalties for non-compliance can be severe, as addressed in “A Dollar Saved – Thousands Spent.”  But that isn’t the biggest risk to an employer.

The greater risk is having a terminated employee of dependent that didn’t get proper notification of their COBRA rights come up with a major medical expense. COBRA provides that the individual has 60 days to elect continuation of their medical benefits. If the COBRA guidelines for notification are not followed then their 60 days doesn’t start. If that individual then comes down with a condition requiring expensive medical care seeks coverage the employer may be on the hook to pay for the expenses. If the normal period has passed to extend the coverage the insurance carrier will deny adding the individual to the insurance plan. Then the employer can end up being liable for the medical expenses.

All this risk can be minimized by administering COBRA correctly. Reviewing your COBRA practices and outsourcing COBRA administration to a company that specializes is the best approach. Use the three questions in “Playing with Snakes” to start. You don’t want to buy a heart.

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