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Premium Assistance for COBRA Benefits The new act
makes significant changes to the laws that give workers who lose
their health benefits the right to choose to continue their health
insurance coverage. The changes to the Consolidated Omnibus Budget
Reconciliation Act of 1986, which take effect March 1, are complex
and impose new employer notice and reporting requirements. Employers
that are subject to COBRA should immediately contact their benefit
plan administrators or benefits counsel for guidance on how to comply.
COBRA requires employers with 20 or more employees
to grant employees and certain family members the opportunity to
continue health care coverage under the employer's group health
care plan for a limited period of time if certain qualifying events
occur, including termination of employment. The term "group health
plan" includes individual insurance policies paid for entirely by
the employee, if coverage under the plan would not be available
to the individual at the same cost outside of the employment relationship.
Generally, employees who elect to continue their health
care coverage may be required to pay up to 102% of the premium cost.
Under the new law, employees (except certain high-income individuals)
will be entitled to premium assistance if they are eligible for
COBRA coverage between Sept. 1, 2008, and Dec. 31, 2009, and are
involuntarily terminated (other than for gross misconduct). The
federal government will subsidize 65% of the COBRA premium actually
charged to an employee for up to nine months. The individual will
be responsible for 35%.
Employers, or health plans that administer COBRA
benefits, will be required to pay 65% of the COBRA premium but will
be reimbursed through an offsetting credit against their income
tax withholding or payroll tax liability. If the COBRA subsidy exceeds
the employer's liability for such taxes, the law provides that the
U.S. Department of the Treasury will reimburse the employer for
the excess. The subsidy does not apply to health care flexible spending
accounts.
The U.S. Chamber of Commerce and other business groups
are seeking to push back the effective date of the new COBRA rules
to give employers more time to comply. But staffing firms should
not assume that this will happen and should make every effort to
comply with the March 1 deadline.
Visa Conditions for Employers Receiving TARP Funds
The new stimulus law imposes conditions on companies
that receive funds through the Troubled Asset Relief Program and
hire employees with H-1B visas. The H-1B program is used by U.S.
businesses to employ college-educated foreign workers with highly
specialized knowledge.
The provision in the law makes it unlawful for any
recipient of TARP funding to hire an H-1B worker unless the company
has satisfied the requirements imposed on an "H-1B dependent employer."
Under current law, an H-1B dependent employer is an
employer with a high percentage of H-1B workers relative to the
employer's total U.S. work force. However, the stimulus law will
treat employers that receive TARP funds as H-1B dependent companies
for new visa petitions that they file in the next two years, regardless
of the percentage of H-1B workers in their work force.
An H-1B dependent employer must comply with certain
recruitment rules to hire H-1B workers. Before filing a new H-1B
petition, the employer must attest that it has taken good faith
steps to recruit U.S. workers for the position for which the H-1B
worker is sought, at a wage at least as high as that offered to
the H-1B worker. In addition, the employer must attest that it has
not laid off, and will not lay off, any U.S. worker in a job essentially
equivalent to the H-1B position within 90 days before or after the
filing of the H-1B petition.
Immigration lawyers consulted by ASA believe that
the H-1B conditions imposed by the stimulus law will not apply to
a staffing firm that hires H-1B workers, provided the firm has not
received TARP funding and does not otherwise meet the definition
of an H-1B dependent employer.
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