benefits are administered. Most importantly for employers 65% of COBRA
benefits must be paid for by the employer and then deducted by the
employer from the payroll taxes paid to the government. Most employers
offering health insurance to their employees in the U.S. will be
required to comply with the new COBRA provisions by March 1, 2009.
The new COBRA system provides employees laid-off since September 1, 2008
through the end of 2009 with as much as a nine-month subsidy to help
them continue receiving their employer's health benefits. These former
employees need only pay 35% of the cost of the monthly premium for
health care coverage if their gross income is less than $125,000 for
individuals or $250,000 for couples. The new government subsidy now
covers the remaining 65 % of the cost of the premium. (Different rules
apply for those making more income).
This benefit must be made available to all qualifying individuals.
Employers must send notices to eligible employees notifying them of
their rights to elect COBRA under the new subsidy rules. The
notification must include employees who have already declined COBRA
continuity. Employers must also allow workers to switch to lower-cost
health plans if they are available.
While employers are readying administrative systems to comply if an
employee pays the full amount of the premium, the employee can later use
that overpayment as a credit toward future premiums or the employer can
reimburse the employees the amount of the overpayment.
Jeanelle Lust
Jeanelle R. Lust
Preparing a Way Forward
Managing Partner
Office: 402-475-7011
Fax: 402-475-8912
Mobile: 402-440-3731
jlust@knudsenlaw.com <mailto:jlust@knudsenlaw.com>
Knudsen, Berkheimer, Richardson & Endacott, LLP
3800 VerMaas Place, Suite 200
Lincoln, NE 68502
http://www.knudsenlaw.com <http://www.knudsenlaw.com/>
Ms. Lust is a charter fellow in the Litigation Counsel of America
http://www.trialcounsel.org <http://www.trialcounsel.org/> and is
admitted in Colorado, Nebraska and South Dakota. Circular 230
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