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    September-2016
 
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Stimulus Plan—Law Cuts Employee COBRA Contribution to 35%

The new stimulus-plan law requires the government to subsidize laid-off workers on COBRA for the nine months, starting March 1, to the tune of 65% of the cost, but employers have to pay the subsidy upfront. 

“Employers will get the money back, but have to give the government a short-term loan,” says Jim Edholm, president of Business Benefits Insurance in Andover, Mass.

“Employers have to get ready now to start administering the subsidy, which starts in less than a week,” he says.

COBRA is the law that lets laid-off or terminated workers stay on their ex-employer’s healthcare plan.  They used to pay the entire premium out of pocket.  Under the new law:

* The employer must pay the 65% to the government and then deduct that as a credit against payroll and income taxes withheld from employees.  So a $1,300 monthly premium would require the employee to pay only $455 — the company first and then the government later pays for the remaining $845.

* The law is retroactive to September 1, 2008, and the employer must reach out to both those who took COBRA at that time and to those who didn’t take it.

* There will be a special "open enrollment" for those who are eligible for COBRA but didn’t take it.  This lets them join at 35% of the cost.

More details are found on Edholm’s benefits blog at http://bbibenefits.wordpress.com/2009/02/17/more-details-on-stimulus-act-cobra-requirements/.


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