Mini-COBRA: Where the Federal Economic Stimulus Package Meets State Legislation
On April 1, 2009, the Senate of Pennsylvania unanimously passed SB 442, PN 783. SB 442 proposes a "mini" or "little" COBRA, requiring employers with health care plans to offer continued hospital, surgical and major medical insurance to eligible employees and dependants who elect coverage and pay a portion of the premium. The bill applies to employers, who normally employed between two (2) and nineteen (19) employees on a typical business day during the preceding year. The bill is now in the House Insurance Committee for consideration.
Under SB 442, a covered employee or dependants with a "qualifying event" (for example an employee's involuntary termination or layoff or a spouse's divorce) is eligible for premium assistance as provided by the federal American Recovery and Reinvestment Act ("ARRA"), also known as the Stimulus Package. The Stimulus Package requires an employer covered by COBRA or similar state law to front sixty-five percent (65%) of the cost of health care premium and receive reimbursement at the end of each quarter through the IRS Form 941 for employment taxes. See the S&Z website for the IRS form. SB 442 would be a similar state law. Coverage under SB 442 lasts for nine (9) months unless the employee fails to pay the remaining required premium sooner.
SB 442, if enacted, will take effect thirty (30) days after signature by the Governor. The bill does not apply to dental only or vision only coverage, but would apply to group health care policies in effect, delivered or issued for delivery on or after the bill's effective date. Go to this website (http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=HTM&sessYr=2009&sessInd=0&billBody=S&billTyp=B&billNbr=0442&pn=0783) or click here to access the text of the bill.
BOTTOM LINE
This bill, if enacted, will require small employers not covered by federal law to front a large portion of insurance premium costs for employees, who are laid off or terminated.
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