COBRA Continuation Coverage Assistance Under The American Recovery And Reinvestment Act Of 2009
If you are anything like me you will want to know all about the way in which the new COBRA Continuation Coverage Assistance will affect the small business owner.
This is President Obama's attempt to give a little "stimulus" to the small business owner. Basically it works as follows:
•· All USA Employers MUST notify employees by 4/18/2009 of their rights under the new assistance.
•· If an employee left employment or was terminated this new assistance applies IF they left employment on or after 9/1/2008.
•· IF they are under COBRA rules there is an 18 month time period from when they were eligible for COBRA benefit. Once that 18 months are up (from when their employment ceased) there is no coverage.
•· IF they are under State Continuation rules there is a 9 month period from when they were eligible for State Continuation benefits. Once the 9 months are up (from the date their employment ceased) there is no coverage.
•· IF the Employee declined COBRA or State Continuation benefits (only if employment ceased on or after 9/1/2008) they are able to be added to the plan with coverage effective 3/1/2009.
•· The subsidy goes into effect on 3/1/2009.
•· If the Employee paid 100% of COBRA or State Continuation coverage prior to 3/1/2009 they get nothing back.
•· Employees will enjoy having their employer paying 65% of their premiums, and the employee is responsible for 35% of the premium.
•· Employers who are paying for the 65% premium there is a credit coming their way on the next quarterly wage and tax form. They can maintain that credit on their quarterly wage and tax forms until this subsidy ends.
Subsidy ending? Who are we kidding, the small business is paying 65% of the premiums. The credit comes at the end of the quarter. The small business is still working out in the fields to earn money to pay the 65% of the premium. The small business has to wait for the next quarterly statement to add in some credit which theoretically offsets the outlay of cash for the 65%. Funny thing about this credit is that it comes after the small business shells it out for a while, then receives it.
I am sure you are all reminded of Wimpy from Popeye The Sailor Cartoons. "I will gladly pay you Thursday for a hamburber today". Same thing the US Government is doing for us with this "subsidy" for group health insurance. When the Government decides to pay us back for a credit to employees today the US Government has just become our own personal version of WIMPY. Also we are going to be paid back for AIG, Mortgage Businesses, Banks, and of course the BIG 3. So when do we owe it, how long to pay it back?
No one is talking about that. I believe my children's children will be paying for this.
Let's watch and see what happens and if we can pull this out a little.
Jack Mann
630-546-9303
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