Although April 15th has passed, be careful not to escape too soon to the golf club, beach or other well-deserved “relaxation haven.” Several specific provisions of the Economic Stimulus Plan, signed on February 17th, came with a 60-day deadline — which was April 18th, 2009.

The Stimulus Plan includes changes that businesses will quickly need to accommodate if they have had, or anticipate, a reduction in workforce from September 1, 2008 through December 31, 2009.

New COBRA requirements effective for periods of coverage beginning on or after February 17, 2009:

• Employers subject to federal COBRA (Consolidated Omnibus Budget Reconciliation Act) are required to accept a 35-percent premium payment from eligible former employees as payment in full for their monthly health insurance premium.
• Employers must pay the remaining 65 percent of the premium on behalf of COBRA participants. Employers are entitled to a credit for these COBRA premium assistance payments on their Form 941 tax return.
• A newly-revised Form 941 must be used to report the number of COBRA premium assistance individuals and the total dollar amount of COBRA premium assistance payments. This newly required information is necessary for FIRST QUARTER 2009 returns — due April 30th.
• The deadline for employers to send Participant Election Notices in connection with the special 60-day election period to eligible participants (those involuntarily terminated since Sept. 1, 2008) was April 18, 2009. This notice provides details on how to take advantage of this special election period as well as details regarding the premium subsidy. Recipients of this notice include those who may have been originally notified at the full premium cost and declined COBRA coverage as well as those who may have elected and subsequently terminated COBRA coverage.
• Through state continuation laws, these regulations may also affect employers that offer group health insurance plans with less than 20 employees.

Action plan: Identify which clients offer group health and educate them on the new requirements, due dates, and implications to Form 941. Be sure to consider your state-specific laws (if applicable).

TO MAKE YOUR KICK-START EASY, we have created a simple client letter that you can put on your letterhead, e-mail, or e-newsletter to push out to clients right away. You’ll find this firm-customizable tool — in both English and Spanish — at www.paychex.com/stimulus.

** To listen to a pre-recorded Economic Stimulus Webcast hosted by Paychex, AICPA and distinguished lecturer Sid Kess, CPA, which contains specific Making Work Pay and COBRA provision details, please visit www.paychex.com/stimulus.

CPAs have a tremendous opportunity to deliver critical client value right now. The liability exposure to business owners subject to COBRA is at unprecedented levels. With unemployment so high, many individuals will be seeking benefits and calling upon former employers to take appropriate action, or expose those employers who do not. You, the CPA, can be the reason why your employer clients remain free of scrutiny or penalty. Your effort provides enhanced protection to clients from COBRA fines of up to $110 PER DAY. Most importantly, you’ll be demonstrating to your clients that you are the trusted adviser necessary to their business’s
overall health.