Complying with COBRA can be a pretty taxing job. Even big companies save time and money by outsourcing administration to companies that specialize in doing it. Even still, you should know some basics about the administrative side of this important law.

How does the employee sign up for coverage? After you send out the notice to an employee following a qualifying event, the employee has 60 days to notify you that he or she wants coverage. The employee can write you a letter, call you on the phone or tell you in person. If you don't hear from the employee within 60 days after your notification or 60 days after the event took place (whichever is later), the employee is no longer eligible to sign up.

State law. Most states have laws concerning the continuation of benefits. Some of them cover all employers, including small employers, so you might be subject to a state law even if you are exempt from federal law. The laws are complex and differ from state to state. To find out more about your state's laws regarding continuation of coverage, contact your state labor agency or your attorney.

To help people maintain coverage in the case of involuntary termination of employment, for part of 2008 and all of 2009, under the provisions of the American Recovery and Reinvestment Act of 2009, employers may be required to pay a COBRA premium subsidy for up to nine months for certain employees and their families. This subsidy also applies to health care continuation coverage if required by states for small employers.

When researching your obligation under state law, be sure to inquire about the following:

• which benefit plans are covered
• which employers and benefit providers are subject to the law
• which employees are eligible to continue benefits under the law
• which events trigger continuation coverage (what are "qualifying events?")
• which notification requirements you must comply with
• how long continuation coverage can last
• under what circumstances coverage can be terminated