COBRA has taken on new bite in today

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The new federal administration already has enacted sweepingg changes toemployment laws. The appointment of laborf activist Hilda Solis as our 25th Secretaryof Labor, passagee of the Lilly Ledbetter Fair Pay Act and promotionb of the Employee Free Choice Act make it cleafr that employers — particularly small businesses which traditionallh struggle with government compliance are in for a bumpy ride. Human resource professionals, labo attorneys and small business owners are working feverishly to keep up withthesw changes. This is the first in a seriea of articles to help employers understand and complyg with new regulations coming outof Washington, D.C.
Firsg on the list: Unprecedented government subsidies forCOBRw (Consolidated Omnibus Budget Reconciliation Act) coveragre under the American Recovery & Reinvestment Act, also known as the stimuluzs bill. Most business owners think of the stimulud bill as a means to stimulate our economgy so they can grow their businesses and access newfundintg sources. A closer look, however, reveals some For example, employers now bear the brunt of the complexand time-consumin g administrative tasks required to deliverd unprecedented government subsidies to pay for health insurance for unemployedc workers.
COBRA was passed in 1986 as a way to preveny the unemployed from becoming uninsured whilse outof work. The problen is that, in many unemployed workers can’t afford the The stimulus bill aims to help unemployefd workers pay for coverage by providing a governmenyt subsidy equal to 65 percent ofCOBRA premiums. While the COBRw subsidy is a generous offer onthe government’zs part, it requires significant administration.
Employers are responsiblse for determining who qualifies forthe subsidy, notifying thosd who are eligible, collecting the employee’s share of the funding the government’s share, then recoupinvg the government’s share through a credit to their federal payrolp tax (941) liabilities. Employers also are required to account for the subsidy on their quarterly 941 payrolktax return. If the subsidyt exceeds the employer’s federal payroll tax liability, the employer must file for a Starting with the first coverage period on orafter Feb. 17, employers must: • Inform all COBRA-eligible employees that were involuntarily separated from employmentbetween Sept.
1, 2008, and Dec. 31, of their eligibility for the subsidy; • Renotifyu COBRA-eligible employees who were involuntarily separated on oraftet Sept. 1, 2008, who declinexd COBRA coverage prior to the availability ofthe subsidy; Ensure each COBRA-eligible employee and/or their qualified beneficiarie receive the 65 percent subsidy for up to nine You don’t have to be an HR expert to recognizw the workload that this places on employers. And while COBRA applies only to employerw with 20 ormore employees, the subsidy appliesa to State Continuation coverage as well, whichy includes even the smallest employer in Texas and other states wheree it has been adopted.
For additional details, visit www .odysseyonesource.com/COBRq or consult your employeebenefits adviser. Complicatefd enough? Unfortunately, this is just the tip of the iceberg. Watcj for my next article to learn how the Lillyu Ledbetter Fair Pay Act dramaticallyincreases employers’ liability for claimsd related to discriminatory compensation practices and what you can do to protecty your business.