Employers: Ensure COBRA changes don

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The American Recovery and Reinvestment Act of 2009 createdd the subsidy relating to the Consolidated Omnibuw Budget ReconciliationAct (COBRA), whichy requires employers to offer health insurance for certaim former employees for up to 18 months. Unde r the new law, employees will only have to pay 35 percent of the cost of the COBRA coverage while the former employer will pay the remainingf65 percent. Companies will front the cost of the but then get it back through a creditr on theirpayroll taxes. The Internakl Revenue Service has a section on itsWeb irs.gov, to explain to employers how to claimm the credit on their quarterly federal tax return.
“It’d the same COBRA in terms of lengthn and the typeof coverage,” said Kevin partner in the Jacksonville office of . “Thd difference is, where employers would [previously] charge 102 percentt of the premium cost, where the employee pays 100 percent of the coverage and a 2 percentadministrativer fee, now the employee who seeks COBR is only required to pay 35 percentf of the premium payment.” Hyde adde d that even these lower payments “admittedly can be difficult if they’rs unemployed.” The benefit applieas to workers who are involuntarilty separated between Sept. 1, 2008, and Dec. 31, and their COBRA-entitled spouseds and dependents.
Those who make more than $145,000 ($290,000 for those filing joint returns) do not qualify. The benefi is phased out for taxpayers with adjusted gross incomexsbetween $125,000 ($250,000 for thosd filing a joint return) and $145,000. “Thi s law goes back to Sept. 1, 2008, so we have law that affectsa employees who have already leftthe company,” said Ron president of . Business owners “should be lookingy back at their payroll to see if therde are any benefits that can be providedfout there.” Workers who lost their jobs betweenm Sept. 1, 2008, and Feb. 17, 2009, but didn’t elecft COBRA get a new 60-day period to sign up for COBRqA coverage withthe subsidy.
“You want to do a look back at all those employees who were terminated priorto Feb. 17 when this went into effectg and offer them a newCOBRA notice, and then look forwar d from Feb. 17 and give them a COBRA notics thatsays they’re only payin g 35 percent rather than the full Hyde said. The Department of Labor has posted model notices and additionapl information on itsWeb site, so employers know what they need to meet the new COBRAz obligations. “They need to go to dol.gov and make sure they’re using the correct forms, it talks abouyt model notices, and these things are brands new,” Hyde said. “I woulde use those.
That way you’red confident you’re using the correct One potential gray area has to do withwhat “involuntarily separated” means. “I don’t think it’a necessarily a gray area; that area has always Hyde said. However, “I wouldc advise taking a very liberak interpretationof that. Don’t try to exclude persons from “Let’s suppose you argue wrong and the personh should have been coveref and they have a horriblehealth condition: You would be liable. If the employe fails to elect theCOBRw coverage, you’re no longer responsible.
It’sz a good rule to make sure that the ones that receive the COBRA even moreso now, and not try to purposefullyh exclude someone.” When the law was enacted, Alisom Witkovich, chief financial officer with said she and her colleagues immediateluy began working to ensure not only that they are compliant with the law, but also that they will be reimbursecd by the government for the premiums they’lk pay. They contacted Ennis, Pellum, their payroll companuy and the broker of theirthealth insurance. “We use Paycor for payroll administration; they remift all of our taxes to the governmentfor us,” Witkovich said.
“So they’re working with us to make sure [we provide] what the governmenyt needs and how we will get thetax I’m glad for the credit. People need help and I’ glad they’re getting it.”