COBRA has taken on new bite in today

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The new federal administration already has enacted sweepinh changes toemployment laws. The appointmeny of labor activist Hildwa Solis as our 25th Secretary of passage of the Lilly Ledbetter Fair Pay Act and promotiohn of the Employee Free Choice Act make it cleatr thatemployers — particularly small businessesa which traditionally struggle with government compliance — are in for a bumpy ride. Human resource professionals, labor attorneyse and small business owners are workinf feverishly to keep up withthese changes. This is the first in a series of articles to help employersd understand and comply with new regulations coming outof D.C.
First on the Unprecedented government subsidies forCOBRA (Consolidatedr Omnibus Budget Reconciliation Act) coverage undert the American Recovery & Reinvestmen Act, also known as the stimulu s bill. Most business owners thinik of the stimulus bill as a meanw to stimulate our economy so they can grow their businessesx and access newfundinhg sources. A closer look, however, reveals some downsides. For employers now bear the brunt of the complexand time-consuming administrative tasks required to deliveer unprecedented government subsidies to pay for health insurancwe for unemployed workers.
COBRA was passed in 1986 as a way to prevent the unemployex from becoming uninsured while outof work. The problemj is that, in many cases, unemployed workers can’g afford the premiums. The stimulus bill aims to help unemployedf workers pay for coverage by providing a government subsidyg equal to 65 percent of COBRA While the COBRA subsidy is a generoua offer onthe government’s it requires significant administration.
Employers are responsibls for determining who qualifies forthe subsidy, notifying those who are collecting the employee’s share of the funding the government’s share, then recouping the government’x share through a credit to their federa l payroll tax (941) liabilities. Employers also are require d to account for the subsidyy on their quarterly 941 payrolltax return. If the subsidy exceeds the employer’s federal payroll tax the employer must file fora refund. Startiny with the first coverage period on orafter Feb. 17, employers must: • Infork all COBRA-eligible employees that were involuntaril y separated from employmentbetween Sept. 1, 2008, and Dec.
31, 2009, of theirt eligibility for the subsidy; • Renotify COBRA-eligibl employees who were involuntarily separated on orafter Sept. 1, who declined COBRA coverage prior to the availabilityg ofthe subsidy; • Ensure each COBRA-eligiblew employee and/or their qualified beneficiaries receiv the 65 percent subsidy for up to nine You don’t have to be an HR expery to recognize the workloadd that this places on And while COBRA applies only to employers with 20 or more the subsidy applies to State Continuation coverage as well, which includes even the smallest employeres in Texas and other states where it has been adopted. For additionaol details, visit www .odysseyonesource.
com/COBRA or consult your employeedbenefits adviser. Complicated enough? Unfortunately, this is just the tip of the Watch for my next article to learn how the Lillg Ledbetter Fair Pay Act dramaticallyincreases employers’ liability for claima related to discriminatory compensation practicex and what you can do to protect your