Thursday, March 12, 2009

Stop helping before you kill us all

Jo Egelhoff attended a 'Meet Your Legislator' meeting recently.  The topic of the $850B Recovery and Reinvestment Act came up ..
One of the small business owners (a health insurance broker) in the audience asked the aides a very specific question about the COBRA assistance measure in the bill. Something like this:
Certain employees who have been laid off can, if they so opt, continue paying health care premiums through the business’s group health plan. Under the “stimulus bill,” those employees can have 65% of their COBRA premium paid by the federal government. At $300, $400 and $500 a month, that 65% subsidy can mean a great deal.

The problem is the employer must pay the subsidy and wait to get “paid” by the federal government until he files his payroll taxes, when he takes a tax credit… And that’s only if the employer has enough employees left to have enough payroll taxes owed to get credit for all the premium(s) he paid.

So you see, it’s a cash flow problem for the employer – and believe me, I see small businesses that are struggling with this.
Well, that was a bit complex and difficult to follow, so there were a few questions back and forth. One of the aides, experienced, helpful and certainly well-intentioned, but in this case very perplexed, figuratively threw up her hands and said:

“But the stimulus package is supposed to help small business.”

Laid off employees get help with COBRA.  The business that laid them off eats the cost.

Dear Government: you've done enough, you can stop helping now.

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