Your Ad Here

New insurance rules, stimulus bill create more headaches for business

The new federal stimulus bill helps subsidize insurance coverage for laid-off workers, but it also creates a new headache for employers.

Sandy Reynolds, an executive vice president of Associated Industries of Massachusetts, said the Boston-based employer group’s human resources hotline has been flooded by calls in the past two weeks from businesspeople who have questions about the new subsidy rules.

“It’s been off-the-wall busy with people calling and asking what they need to do and when they need to do it,” she said.

The callers are concerned about how to handle a new subsidy that could last up to nine months for COBRA coverage, a federally mandated extension of health insurance coverage for people who leave an employer.

Typically, workers who opt for the coverage pay the full cost of COBRA premiums to continue to participate in their former employer’s health plan. But the federal stimulus bill signed by President Obama last month provides subsidies for up to nine months for eligible workers who have been involuntarily terminated between Sept. 1, 2008, and Dec. 31, 2009.

The displaced workers now only need to pay 35 percent of the premiums, while their former employers need to subsidize the rest. The federal government, in turn, will reimburse the companies by allowing them to claim the subsidies as tax credits.

The problem for businesses, Reynolds said, is that many of them remit their taxes to the federal government on a quarterly basis. That means the employers may need to wait at least three months before they are essentially reimbursed for their COBRA payments.

“There could be quite a few months where a significant amount of cash could be tied up,” Reynolds said. “Our biggest concern is the financial obligation ... and the administrative burden on companies that are laying people off because of the economy. In a very uncertain economic environment, employers are being asked to do more.”


Source : http://www.wickedlocal.com

0 comments:

Post a Comment