Corporate Coverage is pleased to announce being named one of the TOP TEN LARGEST EMPLOYEE BENEFITS ADMINISTRATORS IN MARYLAND as published in Baltimore Business Journal (Feb '09).
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COBRA News and Updates
As many of you may already know, the Stimulus Bill which was signed by President Obama includes a subsidy for COBRA premiums. We have been following this legislation closely. The following is a synopsis of what the law provides and the changes we are making to accommodate those provisions.
How much is the subsidy?
Under the legislation, the government will pay 65% of COBRA Premiums for up to 9 months.
Who is eligible?
Anyone who has experienced, or does experience, an involuntary termination between September 1, 2008 and December 31, 2009.
Special Enrollment Period
There is a special 60 day COBRA election window during which anyone who has experienced an involuntary termination between September 1, 2008 and now may re-elect coverage up to the same amount they carried at termination.
The participant may elect alternative benefits within their employer's plan as long as the premium is equal or lesser than their original benefits.
This is the case regardless of whether
- They chose not to elect any coverage at all at the time
- They chose to elect less coverage than they were originally entitled
- They ceased paying their premiums and coverage was therefore terminated
Participants will no longer qualify for the subsidy if they reach Medicare eligibility or become eligible for insurance under another health plan (as may be the case if/when they find employment). If a participant should become eligible for insurance under another plan and not notify their previous employer, there is a penalty equal to 110% of the subsidized amount.
What/Who is not covered?
- The subsidy will not cover contributions to Flexible Spending Accounts (FSAs)
- Singles making 125K+ per year are ineligible
- Couples making 250K+ per year are ineligible
- And, if a person who experiences an involuntary termination and elects COBRA, and then makes over the 125K per year, they will be required to pay back any subsidy they may have been given
When does the coverage begin?
While it is not definite as of yet, March 1st, 2009, is the likely beginning coverage date.
Will the subsidy be counted as income?
No. The amount of the subsidy will not in any way be counted as income to the employee.
How are employers to be reimbursed?
Employers will pay the full premium to the insurance carrier and be reimbursed by the government in the form of a reduction in their Federal payroll taxes. If the 65% subsidy should be greater than their tax liability, they will be reimbursed directly by the government for the difference.
What are the changes Corporate Coverage is making to help administer the subsidized COBRA premiums and to make the processing of subsidy's easier in the future?
The government is requiring that employers distinguish between voluntary and involuntary terminations in order to be reimbursed. In order to address this need, Corporate Coverage is creating a report to assist employers to identify involuntary terminations retrospectively, meaning back to September 1st, 2008.
Employers also need to account for their tax credits associated with the subsidy and to report this to the government. To address the need for employers to receive their tax credit, Corporate Coverage is creating a report to help employers receive the appropriate tax credit on Form 941.