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NFIB Talking Points: Healthcare Stimulus Update

February 26, 2009

On Feb. 17, the president signed H.R. 1, the American Recovery and Reinvestment Act of 2009, into law. The changes made to the Consolidated Omnibus Budget Reconciliation Act (COBRA) are scheduled to take effect March 1, 2009, and affect employers offering healthcare--including small businesses.  

Changes made to COBRA in  H.R. 1, the American Recovery and Reinvestment Act of 2009

About COBRA
As part of the American Recovery and Reinvestment Act, the federal government will subsidize 65 percent of the COBRA costs for employees who are involuntarily terminated from employment between Sept. 1, 2008, and Dec. 31, 2009. The former employee would be responsible for the remaining 35 percent of the premium. Employers and insurance companies will administer the subsidy, which imposes new administrative and notice requirements on business owners.  

Why COBRA provisions may affect your small business
Under federal law, COBRA is required for group health plans sponsored by employers with 20 or more employees. The temporary COBRA assistance provisions outlined in the American Recovery and Reinvestment Act also apply to state mini-COBRA laws. There are 40 states that have mini-COBRA laws, meaning employees of small businesses offering health insurance in those 40 states would be considered eligible for the premium assistance.

Effective date
The subsidy is available starting March 1, 2009, but not all guidance has been provided. Based on what we know, below are some tips for small business owners. 

What to do now:

  1. Determine whether your state has a mini-COBRA law. Check with your insurer to learn more about mini-COBRA requirements in your state or see the attached state chart for more information.
  2. Compile a list of individuals who were involuntarily terminated on or after Sept. 1, 2008, and any eligible spouses and dependents who were enrolled in coverage prior to the termination;
  3. If your business' health plan is insured, check with your insurance carrier to find out how to enroll individuals who are not currently enrolled in COBRA;
  4. Make sure COBRA premium billings for March 2009 account for the 65 percent subsidy; and
  5. Stay tuned for more information, including model notices and updated employment tax forms for taking the subsidy credit.

 

This an overview of new law. It is not intended to be legal advice for any specific factual situation.

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