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 Today in HR: Pending Stimulus Bill Could Extend Federal COBRA Subsidy (1339 hits)
President Obama is pursuing an extension of the 2009 Trade Adjustment Assistance bill, a portion of the American Recovery & Reinvestment Act which provides resources for displaced workers. HR professionals should take note because this could potentially affect your organization’s health insurance benefits.

In addition to funding state and local job training and placement programs , TAA would also extend the HCTC tax credit which provides a 65% subsidy for COBRA health insurance coverage to workers laid off in industries hit hard by economic conditions. HCTC also subsidizes health coverage for retirees whose pension plans have become insolvent and extends the eligibility period for COBRA.

If an employee becomes COBRA eligible and is a member of one of these groups (even as a beneficiary of a previous employer’s DB plan that defaulted), that employee would be eligible for the HCTC subsidy.

Although many benefits administrators and human resources professionals are unfamiliar with HCTC, the http://www.irs.gov/individuals/article/0,,id=171007,00.html >IRS website offers lots of useful information on how the COBRA health insurance subsidy is administered.

Employees participating in the HCTC subsidy pay their 35% share of health insurance premiums directly to the IRS, who then submits payment in full directly to the employer.

One important note for benefits administrators – this is separate from the ARRA COBRA premium reduction for involuntarily terminated workers, for which eligibility ended on May 31, 2010.

If your organization has recently downsized, you might want to consider applying for TAA benefits. Once your company has been certified, affected employees will have access to federally-funded job search and placement assistance. Any authorized representative can apply on behalf of your organization (usually a HR generalist or manager, or a union representative).

Employers wishing to participate in the TAA program would apply via the Department of Labor website. Approval would allow the employer’s displaced employees to become eligible for assistance. If the petition is approved, individual employees can enroll via their local one-stop career center (usually your state or county’s workforce development office).

About Jonathan Carter

Jonathan Carter is a human resources professional specializing in health and welfare benefits plan administration in both public and private sector organizations. As a HR subject matter expert, his publications focus on emerging issues in employee benefits such as health plan design, cost containment, benefits compliance, and healthcare industry trends. Jonathan also offers expertise in a wide range of topics in human capital management, including recruitment and retention, employment law, employee relations, SAP & PeopleSoft HRIS administration, and HR project management.

Posted By: Jonathan Carter
Tuesday, May 17th 2011 at 11:31AM

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