Dear Workforce
Q: How Do COBRA Changes Affect Companies That Fall Below the Employee Limit
Does the COBRA subsidy created under the American Recovery and Reinvestment Act affect companies not currently governed by federal COBRA regulations? Due to downsizing in the fourth quarter of 2008, our company dropped below the minimum number of employees required for federal COBRA regulations. How does the COBRA subsidy created under the ARRA affect us?
A:
Dear Small Bites:
The COBRA subsidy does affect companies not currently governed by federal COBRA regulations, but only if there is a comparable state COBRA-type law and the plan is insured. Currently, 40 states have COBRA-type mandates. The insurer, rather than the employer, will be responsible for paying and being reimbursed for the subsidy.
If your company downsized, for the remainder of 2008 you will be subject to COBRA because COBRA applies to employers that normally employed at least 20 employees on at least 50 percent of its typical business days during that year. If you do not hire any additional employees during at least 50 percent of 2009, you will not be subject to the federal COBRA laws in 2009. However, you will remain obligated to provide COBRA coverage to anyone who had a qualifying event in 2008, and, if you plan is insured, the insurer may be subject to state continuation coverage laws.
SOURCE: Chantel Sheaks, Buck Consultants, Washington, and Richard Stover, Buck Consultants, Secaucus, New Jersey
LEARN MORE: Tool: Resources for Keeping Up With COBRA Changes; new COBRA guidelines from the Internal Revenue Service clarify key questions for employers.
The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.
|
Ask a Question
|
Dear Workforce Newsletter
|
Recent Q&A's
Sign Up!
Get the Dear Workforce e-newsletter.
Leave A Comment
Guidelines: Comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. We will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. You are fully responsible for the content you post.
