COBRA Subsidy Extension Number Two

Business Survival Tip
Episode 34
By Carl Kleimann
March 17, 2010

Full Interview transcript

Carl: Hello business owners this is Carl Kleimann from Odyssey OneSource with another Business Survival Tip.
On March 2nd, President Obama signed the Temporary Extension Act of 2010. This new law extends unemployment benefits and the federal government’s COBRA subsidy that would have otherwise expired on February 28th for millions of unemployed Americans.

Understand that this is the second COBRA subsidy extension in 3 months and it probably won’t be the last. Just last week, the Senate passed a Jobs Bill that will extend the subsidy through the end of 2010 if it passes the House. The subsidy is equal to 65 percent of the total COBRA premium and employers are responsible for paying it and then recouping the money through payroll tax credits.

The extension grants eligibility for the subsidy to those that are laid-off during the month of March. Previously, it was set to expire at the end of February. In a strange twist, it also creates a new qualifying event under COBRA. Employees whose hours were reduced at any time since September 1, 2008 AND are terminated on or after March 2, 2010 are now eligible for COBRA and the subsidy. So for the first time, employers may be required to offer COBRA to a part-time employee that is not even covered by their healthcare plan at the time they are terminated.

The recent extension includes a new penalty equal to $110 per day for any employer who fails to comply with a determination of subsidy eligibility within 10 days of receiving it. If you have not already outsourced your COBRA administration to a professional, you should consider doing so. It has become an extremely complex task and it is not likely to get better any time soon.

I am Carl Kleimann and this has been another Business Survival Tip by Odyssey OneSource, ranked as the number one Professional Employer Organization three years running by the Black Book of Outsourcing.
For more information on this and other issues affecting employers, please visit www.odysseyonesource.com