Stimulus Bill Expands COBRA, Raises Cost to Employers

Stimulus Bill Expands COBRA, Raises Cost to Employers

WANADAs Insurance Agency is contacting all current dealership clients to make them aware that a portion of the recently passed stimulus bill expands COBRA and significantly increases cost to employers.

Under the new law, persons who have been involuntarily terminated (fired or laid-off) from September 1, 2008 through December 31, 2009, must be offered the opportunity to enroll in COBRA again with an effective date of March 1, 2009.These letters will be sent out by WANADA as soon as the DOL gives guidance on the language that must be included.

Persons who are already enrolled in COBRA as a result of involuntary termination will also have special rights as of March 1, 2009.

And in a major cost increase to employers, eligible former employees will pay 35% of the medical premium and the employer will pay 65% for a period of up to 9 months. Formerly, those with COBRA coverage paid 100% of premiums for up to 18 months with no cost to employers.

It is WANADAs understanding that the employer will be able to take a dollar-for-dollar reduction on payroll taxes for both FIT and FICA.WANADA has requested written detail of the mechanics of this from our CPA, CBM. We will keep dealers advised.

In the interim, WANADA is contacting dealership employee benefits administrators to inform them of the changes to COBRA. If you have any questions talk to your employee benefits administrator in the dealership, or contact John ODonnell at WANADA (202) 237-7200 or jod@wanada.org.