If the Obama Administration gets its way, Accounting’s job will soon expand beyond just removing names of laid-off employees from the payroll system.
The economic stimulus package now under construction in Washington will almost certainly include subsidies to help people continue their health insurance after being terminated. Typically, workers can do this through COBRA benefits for up to 18 months, but at a price that’s cost prohibitive for the newly unemployed person who doesn’t know from where – or when – that next paycheck’s coming.
In fact, Families USA, a consumer health organization, just released a report saying that the average national premium costs for family COBRA coverage consume almost 84% of average unemployment benefits.
To keep people insured at a time when they most need it, Democratic lawmakers want to provide employers who pay part of the premiums for their unemployed workers with a tax credit. This credit would be offset against payroll taxes and reported on Form 941, Employer’s Quarterly Federal Tax Return.
In some respects, lawmakers know this type of program works. In Massachusetts, for instance, the law provides subsidies of up to 80% of COBRA premiums for the unemployed. These benefits are funded by a dedicated employer payroll tax.
The assumption, though, is that any federal funding that’s made available would replace state subsidies such as Massachusetts’ program.
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