Independent Contractor Compliance Blog - by Collabrus™

The American Recovery and Reinvestment Act of 2009 include changes to the health benefit provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly referred to as COBRA.

The COBRA and Cal-COBRA programs allow newly unemployed individuals to retain their health care through their previous employer for a period of time. The individual and the employer share the cost. Now the employer may receive credit/reimbursement of their share from their federal payroll taxes.

Types of COBRA:

Federal COBRA is a U.S. law that applies to employers and group health plans that cover 20 or more employees.

Cal-COBRA is a California law that is similar to federal COBRA; however it applies to employers and group health plans that cover from 2 to 19 employees.

What does the new law allow?

Under the new law, former employees enrolled in their employer’s health plan at the time they lost their jobs, pay only 35 percent of the cost of COBRA/Cal-COBRA coverage. Employers treat the 35 percent payment by eligible former employees as full payment; however, the employers are entitled to a credit for the other 65 percent of the COBRA cost on their federal payroll tax return.

If you want to know more go online to:

• Department of Labor - www.dol.gov/ebsa/COBRA.html
• Internal Revenue Service - www.irs.gov/newsroom/article/0,,id=204709,00.html
• Department of Managed Healthcare (Cal-COBRA information) - www.dmhc.ca.gov/dmhc_consumer/hp/hp_cobra.aspx

Or check with your HR benefits expert.