Did we offer this employee the right options when his health insurance ran out?

Q: "We are a small employer in the state of New Jersey, with less than fifty employees. We have some questions in reference to an employee, a truck driver. First, the employee had unexpected heart surgery, and will be out of work for five or six months. We paid for his medical insurance for an additional one-and-a-half months after his surgery, but we can no longer afford the expense of the medical insurance and offered him the COBRA plan. The broker tells us, 'In the state of New Jersey, you have to be on the payroll in order to be on the medical plan.' The employee told us, 'I can't afford the COBRA payment.' Certified letters were mailed to him explaining the COBRA law, and the amount of money he has to pay is more than $1,300. Are we right or wrong in what we did? In addition, do we have to take him back when he is medically able to return? The position has already been filled, the new employee is outperforming him, and we don’t want him back." – Joseph, New Jersey