Baking & Snack - September 2009 - 25

27
one they had at the time of separation. The coverage plan the former
employee seeks to opt in to also has
to be a plan that the employer offers. Therefore, if the employer only
has one plan, this change is a nonissue.
Employers are required to post
notification of the changes to
COBRA. The date for notices to
be issued was April 18, 2009. The
Department of Labor has "model"
notices available for download on
its Web site www.dol.gov/COBRA.
Employers that have not already
posted their notices would be wise
to mail copies directly to their former employees who may qualify.
The government also puts
the burden for keeping track of
the employee's COBRA status on
the employer. To qualify for the
tax credit, the employer must retain and submit documentation
that the employee paid his/her
35% share of the premium to
receive reimbursement.
THIS ISN'T EASY. For employers
who haven't already started, there is
a lot to do. First, employers need to
understand which former employees are entitled to the subsidy; they
need to send out notice to all former
employees so that the 60-day opt-in
period can begin; and they need to
establish recordkeeping procedures
for documenting which former
employees pay the 35% premium.
Companies also need to determine how they intend to pay the
65% outlay up-front. They shouldn't
expect reimbursement until the end
of the quarter, so they need to have
sufficient cash reserves on hand to
pay their portion of the premium.
This is particularly onerous for
companies with tight cash flows or
that have had to lay off large numbers of employees.
Companies should carefully
review their termination policies
and layoff plans in light of the new
regulations to ensure that employ-

ees are properly classified when
they are let go. Remember, a lot of
employees who don't fit the standard definition of "laid off " will be
entitled to the subsidy.
◾
Richard D. Alaniz is senior partner at
Alaniz and Schraeder, a Houston, TXbased national labor and employment

firm. He has been at the forefront of
labor and employment law for more
than 30 years, including stints with
the  U.S. Department of Labor and
the National Labor Relations Board.
Questions about this article can be
addressed to Rick at (281) 833-2200
or ralaniz@alaniz-schraeder.com.

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