COBRA has taken on new bite in today

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The new federal administration already has enacted sweepin g changes toemployment laws. The appointmenf of labor activist Hilda Solis as our 25th Secretartof Labor, passage of the Lillh Ledbetter Fair Pay Act and promotionh of the Employee Free Choice Act make it clear that employera — particularly small businesses which traditionallyh struggle with government compliance — are in for a bumpy ride. Human resourcs professionals, labor attorneys and smal l business owners are working feverishly to keep up withthesr changes. This is the first in a series of articles to help employerw understand and comply with new regulations cominvg outof Washington, D.C.
First on the Unprecedented government subsidies forCOBRA (Consolidated Omnibus Budgeyt Reconciliation Act) coverage under the Americabn Recovery & Reinvestment Act, also known as the stimulua bill. Most business owners think of the stimuluas bill as a meane to stimulate our economy so they can grow their businesses and accesse newfunding sources. A closer look, however, reveals some downsides. For example, employers now bear the brunyt of the complexand time-consuming administrative tasks requirex to deliver unprecedented government subsidies to pay for health insurance for unemployed workers.
COBRA was passedr in 1986 as a way to prevent the unemployer from becoming uninsured while outof work. The problejm is that, in many cases, unemployedc workers can’t afford the premiums. The stimulusz bill aims to help unemployed workers pay for coverage by providinvg a government subsidy equal to 65 percent ofCOBRw premiums. While the COBRA subsidy is a generous offed onthe government’s part, it requirezs significant administration.
Employers are responsible for determining who qualifieas forthe subsidy, notifying those who are collecting the employee’s share of the premium, funding the government’s share, then recouping the government’s shared through a credit to their federal payroll tax liabilities. Employers also are required to account for the subsid y on their quarterly 941 payroll tax If the subsidy exceedsthe employer’s federal payrolp tax liability, the employer must file for a Starting with the first coverag e period on or after Feb. 17, 2009, employers • Inform all COBRA-eligible employees that were involuntarily separatef from employmentbetween Sept. 1, 2008, and Dec.
31, of their eligibility for the subsidy; • Renotifyh COBRA-eligible employees who were involuntarily separated on orafter Sept. 1, 2008, who decline COBRA coverage prior to the availabilith ofthe subsidy; • Ensure each COBRA-eligible employer and/or their qualified beneficiaries receive the 65 percent subsidy for up to nine You don’t have to be an HR expert to recogniz e the workload that this places on And while COBRA applies only to employerz with 20 or more employees, the subsidg applies to State Continuation coverage as well, whicy includes even the smallest employers in Texas and other states where it has been adopted. For additionao details, visit www .
odysseyonesource.com/COBRA or consult your employeebenefitx adviser. Complicated enough? Unfortunately, this is just the tip of the Watch for my next article to lear how the Lilly Ledbetter Fair Pay Act dramaticallyhincreases employers’ liability for claims relate d to discriminatory compensation practices and what you can do to protect your business.