Employers Grab Your wallets: 60% Employers to fund COBRA for termed and laid off employees!

Late yesterday we received word that the House-Senate conference committee had reached a compromise on the economic stimulus bill.  Although some members of Congress have attempted to scuttle the deal, it appears that the House is set to vote upon the compromise bill as early as this afternoon, with the Senate to follow on Friday.  As of 9:00 am this morning, a final version of the compromise bill has not yet been released.  However, a summary of certain provisions has been released.  Based on that summary, we understand the COBRA provisions to be intact with the following revisions:
 
1.  A 60% premium subsidy for 9 months.
2.  Individuals with annual incomes above $125,000 (single) or $250,000 (couples) would not be eligible.
 
It appears that the March 1st effective date is still intact, but with a 60 day grace period to perform retroactive adjustments.  The annual income threshold is particularly troubling given that employers and TPAs will need to administer the subsidy.  Without additional guidance from the Service, due to the penalties that apply to underpaid payroll taxes, employers may need to obtain income verification from COBRA participants, rather than taking a more traditional approach (such as relying on written certifications from participants). 
 
We will keep you updated as further information is released. 
 
 



Mark L. Stember
Kilpatrick Stockton LLP
Suite 900
607 14th Street, NW
Washington, DC 20005
t 202.508.5802
f 202.585.0018

 

 

 

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