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Pennsylvania Mini-COBRA Effective July 10, 2009
Attn: Pennsylvania Small Businesses
You Must Comply with the new Pennsylvania Mini-COBRA Law
On June 10, 2009, Governor Rendell, signed a bill into law providing for continued health insurance coverage for employees of Pennsylvania employers with 2 – 19 employees. All small businesses offering health insurance to their employees must comply effective July 10, 2009.
Until now, small employers with fewer than 20 employees were not required to provide continuing health insurance coverage to employees and their dependents. Further, small employers did not have to provide notice and access to the 65% federal premium subsidy available pursuant to the American Recovery and Reinvestment Act of 2009 (“Stimulus Plan”).
Small employers should now be aware of the following key components of the new
PA Mini-COBRA law:
* A “qualifying event” that triggers Mini-COBRA notice requirements and eligibility includes: termination of employment (except for gross misconduct), divorce or legal separation, death of the covered employee, reduction of hours, dependent child ceasing to be a dependent, and the covered employee being eligible for Medicare.
* The employer is required to provide proper notice to qualified beneficiaries, the plan administrator, and the insurance carrier within 30 days of the qualifying event.
* The 65% Stimulus Plan subsidy notice must also be sent to the qualified beneficiary by the employer.
* Under the Stimulus Plan subsidy credit, the employer or entity to which qualified beneficiaries pay their continuing coverage premiums would seek reimbursement for the 65% credit against payroll taxes.
Mini-COBRA allows qualified beneficiaries to elect COBRA for up to 9 months. The PA Mini-COBRA law does not have an expiration date, so this appears to be an ongoing law. The Stimulus Plan 65% credit is due to expire on December 31, 2009 unless extended by Congress.
It is unclear at this point how some of the more subtle administrative procedures of the PA Mini-COBRA law should be handled by the small employer. For instance, will the employer be required to track proof of mailing the notice to qualified beneficiaries and what type of notice and grace period is required if the qualified beneficiary fails to make a timely premium payment? Many professionals suggest that small employers use the Federal COBRA regulations as guidelines when specific PA Mini-COBRA guidance does not exist.
For more information on the Mini-COBRA law, here is a link:
http://www.ins.state.pa.us/ins/cwp/view.asp?a=1274&Q=550035&PM=1
If you have further questions concerning how the PA Mini-COBRA law applies to your business, please contact Douglas Delp at the Delp Group Inc. at 215-692-1956 or at www.delpgroup.com. We are a full service human resources and group benefits brokerage company. We provide complimentary HR advisory services and COBRA administration and compliance to our group benefits brokerage clients.
This Information is designed to highlight various employee benefit matters of general interest to our readers. It is not intended to interpret laws or regulations or to address specific client situations.
The Hiring Incentives to Restore Employment (HIRE) Act
was signed into law on March 18, 2010. This new law provides tax benefits to employers who hire workers who were previously unemployed or working part time.
Hiring and payroll tax incentives:
Employers who hire previously unemployed workers (after February 3, 2010 through the end of 2010) may qualify for a 6.2% payroll tax incentive. This incentive effectively exempts the employer from Social Security taxes on wages paid to these workers after March 18, 2010. Employers are still responsible for the Medicare tax and the employees are still responsible for income taxes as well as their share of Social Security taxes and Medicare taxes.
For each qualified newly hired worker, retained at least a year, the business may claim an additional non-refundable tax credit up to $1,000 per worker on their 2011 income tax return.
A few key details regarding the Act are:
- New employees filling existing positions qualify only if the previous worker left voluntarily or was terminated for cause.
- Eligible new employees must sign a statement certifying that they were unemployed during the 60 days prior to beginning work or that they worked fewer than 40 hours per week at their previous job.
- New employees cannot be family members.
- New employees are not required to work a minimum number of hours.
- The payroll tax benefit also applies to not-for-profit organizations.
The Internal Revenue Service released Form W-11, the Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit. Employers can use the form to claim the special payroll tax exemption that applies to many newly hired workers during 2010. Click here to download a copy of Form W-11.
See IRS link for more information. http://www.irs.gov/businesses/small/article/0,,id=220745,00.html
Have you heard about the recently enacted Patient Protection and Affordable Care Act?
It could earn you a new tax credit this year for providing health insurance for your employees!
As part of the Patient Protection and Affordable Care Act signed into law by President Obama on March 23, 2010, your small business might be eligible for a tax credit on your 2010 tax filing. This credit is meant to help employers with moderate income workers afford to offer their employees quality health insurance coverage. In order to qualify as an eligible small employer, (1) the employer must have fewer than 25 full-time equivalent employees (FTEs) for the taxable year; (2) the average annual wages of its employees for the year must be less than $50,000 per FTE; and (3) the employer must contribute at least 50% of the premium cost of single coverage. Your eligible credit will be reduced if your business has more than 10 FTEs and their average annual wages are greater than $25,000.00.
For more information on the tax credit, if your small business qualifies for it, and how to claim it, call The Delp Group, Inc. at 267-923-8361.