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Understanding COBRA




Full Interview transcript

Carl: Hello business owners this is Carl Kleimann from Odyssey OneSource with a Business Survival Tip. Sure, you have heard about President Obama’s Stimulus bill but let me ask - is your business in compliance with its new COBRA provisions that went into effect in April? If you answered no, then listen closely.

The Stimulus bill includes unprecedented government subsidies for the cost of the continuation of healthcare coverage (or COBRA as we know it) for unemployed workers and their dependents. The government will now pay 65 percent of COBRA premiums for those that qualify.

So, here is how it works. Let’s say that you laid off 2 employees on or after September 1st of 2008. And let’s say that one of those employees opted for COBRA and the other declined COBRA when they were originally notified. Here are some steps that you should take:

First of all, you must notify the former employee that originally declined COBRA, that he or she is entitled to another chance. And why would’t he or she take it with the government picking up 65 percent of the tab?

Secondly, you must also notify the other former employee that did elect COBRA, that he or she is now eligible for up to nine months of the subsidy.

And finally, going forward, you must notify all employees that are involuntarily separated that they are eligible for the subsidy.

Making these required notices should be your highest priority. I am Carl Kleimann and this has been another Business Survival Tip by Odyssey OneSource, ranked as the number one Professional Employer Organization two years running by the Black Book of Outsourcing.

For more information on this and other issues affecting employers, please visit odysseyonesource.com.


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