Tip of the Day: Prepare (quickly!) for COBRA changes

March 1 is literally around the corner -- the date when, in compliance with the new stimulus law, the government will begin a nine-month, 65% COBRA subsidy for laid-off workers.

Employers, however, have to pay the subsidy upfront, which means big changes for how they're accustomed to administering and overseeing COBRA.

"Employers will get the money back, but have to give the government a short-term loan," says Jim Edholm, president of Business Benefits Insurance in Andover, Mass. "Employers have to get ready now to start administering the subsidy, which starts [this Sunday]," he says.

To comply with the new normal regarding COBRA -- the law that extends health insurance benefits for laid-off workers -- employers must:

* Pay the 65% to the government and then deduct that as a credit against payroll and income taxes withheld from employees.
* Reach out to employees who both did and did not elect to take COBRA upon termination, back to Sept. 1, 2008.
* Allow for a special "open enrollment" for ex-employees who are eligible for COBRA but didn´t take it. This lets them join at 35% of the cost.