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With the sharp increase in layoffs nationwide, many benefits departments are swamped with COBRA paperwork. At Workforce Solutions, Inc. we process all the necessary COBRA paperwork for our clients, just another benefit of working with us. However, many clients are confused about how the new Stimulus Package, that President Obama signed into law yesterday will impact their company when it comes to offering COBRA to terminated employees.

At least there’s a little good news about COBRA and the stimulus package. Many companies are relieved by the scaled-down COBRA subsidy that accompanied the economic stimulus package passed by Congress. Under the original House version of the bill, there was provision to allow eligible workers to maintain COBRA coverage – at their own expense – until they became Medicare eligible (age 65) or received coverage from another employer.

The rule would’ve applied both to former employees age 55 and older and to workers who worked for the same employer for 10 or more years.

The final bill that President Obama signed into law doesn’t change the COBRA coverage time limit.  If the other bill had passed, it would’ve created a lot of extra burden on employers.  Even though workers take on the direct cost of COBRA coverage, employers are left to deal with legal compliance headaches, increased utilization of their health plan resulting in increased premium costs as well as administrative time.