There has been a great deal of debate recently about whether or not the recently passed ‘American Recovery and Reinvestment Act’ would provide benefit to small business, and I am certainly a participant in that debate. However, one provision of this legislation was recently brought to my attention and it is a provision that will provide tremendous benefit to those workers who were recently laid off and are attempting to keep their medical coverage thru COBRA.
As you are likely aware, the cost of COBRA coverage is significant. In most cases, ex-staffers trying to cover just themselves and not a family are likely paying in the range of $400-500 per month; family coverage likely puts them in the $1000 per month range. Not easy to manage when you’re out of work and trying to live on unemployment.
Therefore, the recently passed Recovery legislation contains a provision that enables laid off employees who meet the criteria to pay just 35% of their premiums for a specified period and still maintain their coverage, with the former employer or their benefits administrator covering the remaining 65%. While this may sound like a problem for small business, the Recovery Act also contains a provision that the business will essentially be “paid back” for the expense by taking a deduction of the equivalent dollar amount in its payroll taxes.
The information on this provision is lengthy; therefore, I have posted articles providing the details on our website at http://www.strategicgrowthconcepts.com/humanresources/HR-Resources-for-Employers_I58.html.