COBRA has taken on new bite in today

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The new federal administration already has enacted sweepingt changes toemployment laws. The appointmeng of labor activist Hilda Solis as our 25th Secretaryyof Labor, passage of the Lilly Ledbetter Fair Pay Act and promotionj of the Employee Free Choice Act make it clear that employerd — particularly small businesses which traditionallty struggle with government compliance — are in for a bumpy ride. Human resource labor attorneys and smallk business owners are working feverishly to keep up withthese changes. This is the firsft in a series of articles to help employere understand and comply with new regulations coming outof Washington, D.C.
Firstt on the list: Unprecedented governmentt subsidies forCOBRA (Consolidated Omnibus Budget Reconciliation Act) coverag under the American Recovery & Reinvestment Act, also knownn as the stimulus bill. Most business owners thinl of the stimulus bill as a meand to stimulate our economy so they can grow thei r businesses and access newfunding sources. A closeer look, however, reveals some downsides. For employers now bear the brunt of the complezxand time-consuming administrative tasks required to deliver unprecedented government subsidies to pay for healtbh insurance for unemployed workers.
COBRA was passed in 1986 as a way to preveny the unemployed from becoming uninsured while out of The problemis that, in many unemployed workers can’t afford the premiums. The stimulus bill aims to help unemployerd workers pay for coverage by providin g a government subsidy equal to 65 percent of COBRA premiums. While the COBRA subsidy is a generous offeer onthe government’s part, it requires significantt administration.
Employers are responsible for determining who qualifies for the notifying those whoare eligible, collecting the employee’s share of the premium, funding the government’s then recouping the government’s shard through a credit to their federal payroll tax liabilities. Employers also are required to account for the subsidhy on their quarterly 941 payroll tax If the subsidy exceedsthe employer’x federal payroll tax liability, the employe must file for a refund. Starting with the firsg coverage period on orafteer Feb. 17, 2009, employersz must: • Inform all COBRA-eligible employees that were involuntarily separated from employmentbetween Sept. 1, 2008, and Dec.
31, of their eligibility for the • Renotify COBRA-eligible employees who were involuntarily separatedr on orafter Sept. 1, 2008, who declined COBRA coverage prior to the availabilit y ofthe subsidy; • Ensure each COBRA-eligiblse employee and/or their qualified beneficiaries receive the 65 percent subsidyg for up to nine You don’t have to be an HR expert to recogniz the workload that this place on employers. And while COBRq applies only to employers with 20 or more the subsidy applies to State Continuation coveragas well, which includesz even the smallest employers in Texas and othetr states where it has been adopted. For additionao details, visit www .odysseyonesource.
com/COBRA or consult your employedebenefits adviser. Complicated enough? Unfortunately, this is just the tip of the Watch for my next articl e to learn how the Lilly Ledbette r Fair Pay Act dramaticallyincreasesx employers’ liability for claims related to discriminatoryh compensation practices and what you can do to protectt your business.