Quantcast
news and events header
Bookmark and Share

COBRA extension impacts
Fort Worth businesses, again

fort worth business press

(Original source http://www.fwbusinesspress.com/display.php?id=11768)

By CARL KLEIMANN
January 18th, 2010

On Dec. 19, 2009, President Obama signed a bill extending the federal government’s subsidy of health insurance premiums under the Consolidated Omnibus Budget Reconciliation Act (COBRA) for workers laid off during the economic downturn.  While the extension is expected to keep thousands of unemployed workers insured under group health plans for an additional six months, Fort Worth employers will once again be tasked with notifying COBRA participants of its provisions.

This subsidy was part of the original Stimulus bill passed in February of 2009 which paid 65 percent of the COBRA premium for up to nine months for employees who were involuntarily separated from employment between September 1, 2008 and December 31, 2009. The Stimulus bill requires COBRA participants to pay 35 percent of their premiums while employers front the government’s 65 percent. Employers may then recover the subsidy as an immediate credit to their next 941 payroll tax deposit.  That process remains unchanged under the terms of the extension. 

The effect of the recent extension is two-fold.  First, it extends the eligibility period for an additional two months, through February 28, 2010.  This means that employees who are involuntarily separated from employment in January and February of 2010 will now be eligible for the subsidy, as will their qualified beneficiaries. 

Second, it extends the maximum term of the subsidy from nine months to 15 months. COBRA participants who have already exhausted their nine months of subsidy will now receive an additional six months. In addition, anyone who exhausted their subsidy prior to the end of December, and opted to discontinue COBRA coverage at the full cost, must now be given the opportunity to re-enroll based on the extended subsidy.  

Furthermore, employers will need to act quickly. The new legislation requires employers to notify current COBRA beneficiaries within 60 days of its enactment on December 19, 2009.  If you outsource your COBRA administration to a third party vendor, that vendor will likely assist you in making these required notices.

In order to comply with the newly enacted subsidy extension, employers must:

Notify all current COBRA participants of the six month subsidy extension.

Notify any COBRA participant that exhausted his or her nine month subsidy and cancelled COBRA coverage that they are now entitled to retroactively resume COBRA.  If they chose to continue COBRA coverage at the full cost, you must either issue them a refund or issue a credit toward future COBRA payments in an amount equal to the subsidy.

And finally, notify all employees that are involuntarily separated through February 28, 2010 that they are eligible for the extended subsidy. 

Business owners should also stay tuned for further COBRA provisions set to surface in 2010.

Carl Kleimann is president of human resource outsourcing firm Odyssey OneSource, based in Euless. www.odysseyonesource.com.

How to reach: Odyssey OneSource Inc.
Call Toll Free on 866-508-7361or use our online contact form

Quick Links