COBRA and ARRA Compliance

Employers get Automated COBRA Compliance with The American Recovery and Reinvestment Act through AmCheck.

As you are aware, President Obama recently signed into law a $790 billion economic stimulus package; the American Recovery and Reinvestment Act.

With AmCheck Get the COBRA Credit IMMEDIATELY!
Unlike other payroll services, with AmCheck your company will receive your COBRA credits towards your 941 Taxes IMMEDIATELY that pay period. You will see your Federal Taxes reduced by the COBRA amounts you entered online or reported to us on that respective payroll that is processed.

New COBRA Components

This plan includes provisions to help eligible jobless workers pay for health insurance under COBRA. Available to employers with 20 or more employees, COBRA allows newly unemployed workers to keep health insurance provided by their former employers. Traditionally, these premiums are prohibitively expensive.

The new Law enacts provisions that will make COBRA coverage more accessible to former employees of your company. The COBRA-Specific Components of the Act include:

• Premium Reduction/Subsidy: For workers who were involuntarily terminated for reasons other than gross misconduct between September 1, 2008 and December 31, 2009, the government will subsidize 65% of their premiums under COBRA for nine months. Health FSAs are specifically excluded.
• High Income Exclusion: If the modified adjusted gross income (AGI) of a participant exceeds $125,000 a year, or a family’s AGI exceeds $250,000, their income tax will be raised by the premium reduction amount – effectively removing the subsidy. The amount of credit that is recaptures on the tax return is according to a sliding scale.
• Special Election Period: For workers who were involuntarily terminated between September 1, 2008 and the day the stimulus Law goes into effect, and who did not sign up for COBRA, will get an additional 60 days to do so. They will receive coverage and the subsidy dating back to February 17, 2009, not their original loss of coverage date. The period of time between the qualifying event date and February 17, 2009 does not count toward the HIPAA 63-day gap in coverage rules for determining creditable coverage.
• New Notification Period: Within 60 days of enactment, AmCheck will provide an additional notification to any Assistance Eligible Employee who became entitled to elect COBRA before enactment of this Law.
• Tax Credit for Employers: To offset the employer’s expense, the employer may take a full tax credit for its expenditures out of its payroll taxes including both income tax withholding and FICA.
• Plan Enrollment Option: Qualified Beneficiaries (QBs) under the stimulus will have the option to change plans to another product offered by the Employer with the following requirements:
  • Employer agrees to allow Qualified Beneficiaries to enroll in different coverage
  • The selected plan does not exceed the premium for coverage in which the individual was enrolled at the time the qualifying event occurred
  • Plan cannot be Dental, Vision, Counseling, Referral or FSA
  • Coverage is also offered to active employees

During this time of change, you will find it comforting to have a stable and competent organization like AmCheck to manage this vital process for you. Whether you just need us to do the basic COBRA reporting for you or our complete COBRA services which is all inclusive, we have you covered.

Included in your AmCheck Services:

Full COBRA Compliance
The COBRA “65% subsidies” are now required to be reported on your Quarterly Federal Form 941 which AmCheck currently prepares for you. In compliance with the law, you will be required to provide AmCheck with the eligible COBRA subsidy amounts in which you paid to insurance carriers and then we will do the rest for you to receive the credits.

We have a Simple Solution for Online Clients:
If you are using AmCheck’s Web Payroll you will be able to enter the subsidy amounts by employee directly online each pay period as you incur the expense. Client’s not online will have to report the amounts via fax, phone or email.

Refund Checks:
If your COBRA credit exceeds your 941 Taxes for the Quarter you will receive a quarterly 941 COBRA refund check from the Internal Revenue Service some time after the 941 is filed.

A Great Time to Consider Additional AmCheck Benefit Management Services:
AmCheck offers complete COBRA administration services for your business. COBRA compliance is often complex and mundane; AmCheck offers ease of management of these time consuming and legally required responsibilities. From the initial COBRA notification, tracking qualifying events, preparing payment coupons, remitting payments and much more, we virtually do it all for you. Call us for a quote on COBRA Services.

Expect More:
The American Recovery and Reinvestment Act increases the complexity of COBRA and payroll administration services and certain details have not been announced by the Department of Labor or The Internal Revenue Service. Further instruction on the new act and how it affects you will be provided in a future communication from AmCheck.

For more information: Call 888-AMCHECK (262-4325) or email sales@amcheck.com