Forums
New COBRA Stimulus and Furloughs
Benefits & Compensation
New COBRA Stimulus and Furloughs
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
We are a small construction company, but large enough to have to offer our employees COBRA. We have several employees with health insurance coverage (they pay 100% of cost through payroll deduction) t
0
Cat:Topic ForumsForum:ForumId52
Cat:Topic ForumsForum:ForumId52Discussion:DiscussionId35920
Forums » Topic Forums » Benefits & Compensation » New COBRA Stimulus and Furloughs
|
New COBRA Stimulus and Furloughs
posted at 7/7/2009 5:26 AM EDT
|
Posts: 3
First: 7/7/2009 Last: 7/7/2009 |
We are a small construction company, but large enough to have to offer our employees COBRA. We have several employees with health insurance coverage (they pay 100% of cost through payroll deduction) that have been furloughed for two weeks in the middle of the month. They came back to work the beginning of the next month. Our insurance company only does COBRA at the beginning of each month. Do these employees qualify for the 35% payment for the two weeks they were furloughed? |
|
|
New COBRA Stimulus and Furloughs
posted at 7/7/2009 6:51 AM EDT
|
|
Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
Definitely considered an involuntary termination:
Actually found that answer in Question 2 here: Q-2. Does an involuntary termination include a lay-off period with a right of recall or a temporary furlough period? A-2. Yes. An involuntary reduction to zero hours, such as a lay-off, furlough, or other suspension of employment, resulting in a loss of health coverage is an involuntary termination for purposes of the premium reduction. http://www.irs.gov/irb/2009-16_irb/ar09.html#d0e3140 Some brainstorming.... Does your state require that insurance be carried through the end of the month for group plans (regardless of who pays the premiums -- I know if TX it is state law for small group plans)? If so, I would see their perspective that COBRA wouldn't start until the first of the next month and by that time the employee is back to work. So will the furlough automatically result in a loss of coverage? If so, now you have to figure out how to administer short furloughs and COBRA. Are you going to have to get new paperwork with each furlough? Does the time limit to choose COBRA start over with each furlough? If so, I suspect you will have quite a few employees who wait to take COBRA only if they have a claim while furloughed since it is less than a 63 day window for pre-existing conditions. Are the employees going to pay 100% for the weeks they work and 35% for the weeks they don't? Do you normally drop coverage as of their termination date? If so, what do they pay for a partial month now? Who calculates that? You might have to do the premium calculation in house outside of the insurance companies billing. |
|
|
New COBRA Stimulus and Furloughs
posted at 7/7/2009 8:07 AM EDT
|
|
Posts: 3
First: 7/7/2009 Last: 7/7/2009 |
I have all the same questions. I believe it is state law in PA to carry the insurance through the end of the month, because that is how our PA based health insurance company does it. So does that mean that we have to pay for the weeks that they don't work in the month. We have always made the employee pay for the insurance. According to the Health Insurance Company it isn't COBRA because they can't sign up until the 1st of the month, so does it qualify for the 35%?
I tried to call the telephone number the govt. posted for questions and the telephone kept ringing and ringing with no answer. So I guess I just make an educated guess with the information given. |
|
|
New COBRA Stimulus and Furloughs
posted at 7/7/2009 8:32 AM EDT
|
|
Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
This is a good question. The state doesn't determine when insurance is carried until. It's usually the insurance carrier, although depending on the size of the employer, the decision could be theirs.
I would start off by checking your policy and finding out when insurance is carried until. If it's the end of the month, then the answer is pretty easy. If it's until date of termination, you may want to ask your COBRA vendor. |
|
|
New COBRA Stimulus and Furloughs
posted at 7/7/2009 8:49 AM EDT
|
|
Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
Actually in Texas, it is the state that made the law about small group health running through the end of the month, not the carriers. But I don't know about PA.
In TX, the employer has to eat the difference in premiums unless it can take the full amount out of the employee's last check. You might look into a way to do so and calculate that amount at 35% and then take that against your payroll taxes. But you must have the COBRA/AEI paperwork filled out each furlough to do so. And again that takes administration time. I only have two employees on COBRA ARRA and it is already a nightmare paperwork wise -- and I have a TPA administering it! |
|
|
New COBRA Stimulus and Furloughs
posted at 7/7/2009 8:51 AM EDT
|
|
Posts: 3
First: 7/7/2009 Last: 7/7/2009 |
We have no COBRA vendor, I am it, the office gal. The problem is that I can't even get a COBRA notice out and they are back to work within a week and before the start of the COBRA period, but since they are out of work, they should be entitled to pay the 35% for those weeks they are furloughed. I believe that is the intent of this stimulus package, but it is ambiguous about such instances. Especially this year, I think this would be a big issue for many businesses. How can the govt. enforce these issues if they don't address them. |
|
|
New COBRA Stimulus and Furloughs
posted at 7/7/2009 9:17 AM EDT
|
|
Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
Honestly, if I were you, I would try to convince your employer that not charging the employee for benefits for those two weeks would be a better option than COBRA ARRA subsidies and all that goes along with it.
Because you are right, the administration and liability of processing COBRA for those two weeks along with the subsidy is crazy -- especially when you take into account grace periods for decisions and payments! It could be a few months before the employer actually sees the furloughed employee make the payment for that time period. Of course in the end, it is going to depend on how many employees are in this situation and what the total cost to the employer would be if they did it this way. But it might also be a good way to retain some good will and loyalty amongst employees who are furloughed. |
Forums » Topic Forums » Benefits & Compensation » New COBRA Stimulus and Furloughs
