Page 171 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
T IPS &T ECHNIQUES

Many third-party medical insurance providers do not allow partial-
month insurance coverage. This is an important issue when an
employee leaves a company near the beginning of a month, since
the company will still pay its share of the medical cost for the
remainder of the month, even if the employee is no longer working
there. The payroll staff should be sure to charge the departing
employee his or her full share of the medical insurance for the full
month of medical coverage; this deduction is frequently missed in
companies where more than one payroll is generated per month,
since the employee share of the expense is spread over several pay-
checks. Despite the additional manual effort involved in altering the
medical insurance deduction on an employee’s final paycheck, this
can result in significant cost savings to the company.

as long as the former employer had 20 or more employees in the prior
year. If an employee is terminated, then he or she can accept coverage
for an additional 18 months.If an employee becomes entitled to Medicare
coverage or becomes divorced, then the coverage period extends to 36
months. If a spouse or dependent child of an employee loses coverage
due to the death of an employee, then they can obtain coverage for up
to 36 months. If a dependent child of an employee loses dependent sta-

tus, then that person can obtain coverage for up to 36 months.
An employer is required to give notice of potential COBRA cov-
erage to employees when a qualifying event occurs. (Employees are
required to inform the health plan administrator of any divorce, dis-
ability, or dependent issues that would bring about qualification for
benefits under COBRA.) The affected people then have up to 60 days
to elect to take COBRA coverage.

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