Below are examples of the major points in the new requirements:
- The changes are generally effective March 1, 2009, and require employers to pay 65 percent of COBRA continuation coverage premiums for “assistance eligible individuals” for up to nine months after their separation from service. The assistance eligible individuals pay only the remaining 35 percent of the premium.
- The United States Treasury will reimburse the employer that is responsible for the plan for the portion of the premium it pays (i.e., 65%) through a credit on its quarterly employment tax return (Form 941).
- An “assistance eligible individual” is generally defined as an employee who is involuntarily terminated between Sept. 1, 2008 and Dec. 31, 2009 and who elects COBRA coverage and pays 35 percent of the required premium amount.
“All contractors should note that appropriate documentation and filing the appropriate forms with the government is required in order to receive the reimbursement from the U.S. Treasury,” said Todd Taggart, tax partner and practice leader of Grant Thornton’s Construction practice.
Contractors and construction companies also need to take immediate action to locate all eligible participants and distribute eligibility notices, since all notices must be distributed by April 18.
To read Grant Thornton’s guidance New Group Health Plan COBRA Requirements, please go towww.website.com.