Federal COBRA plan has new twist

The federal stimulus plan passed by Congress in February includes a subsidy to help Americans laid off from their jobs afford health insurance. Workers terminated since September have the chance to re-join their former employers’ group insurance plans for 35 percent of the premium cost for a period of 9 months. Prior to the stimulus bill subsidy, workers had to pay 100 percent of the employee and employer share, plus a 2 percent fee to continue coverage under the federal COBRA program. With the new subsidy placed in the stimulus bill, many companies are moving frantically to comply with the April 18th deadline for notifying workers they can participate. Employers must also sign former employees back up for the plan under detailed rules and front the government’s 65 percent subsidy. South Carolina Small Business Chamber of Commerce CEO Frank Knapp says the new subsidy will have little effect on small businesses in the state because 85 percent of the small businesses in South Carolina have 19 or less employees. Knapp says for businesses with two to 19 employees that do not come under the federal COBRA law many states, including South Carolina, offer “mini COBRA” programs.
“If you’re in a business that has between two and 19 employees and that group has a group health plan, if you leave the group and you want to stay on the health plan, you can stay on that plan as long as you pay a hundred percent of the premiums for up to six months.”  39 states offer “mini COBRA” programs.
Knapp says the new law will no doubt cause some headaches for businesses that fall under the federal COBRA program. “There’s a requirement I understand for the business to front some money for the employee and get reimbursed by the state and the employee. So yes, it’s going to impose a burden to businesses that fall under the COBRA regulations and that’s 20 or more employees.”