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The recent health care legislation signed into law by President Barack Obama contains a Small Business Health Care Tax Credit that will help small businesses with the cost of providing their employees with health care. The tax credit’s benefits are available immediately for the 2010 tax year.

According to the Congressional Budget Office, small businesses are expected to save an estimated $40 billion by 2019, due to the Small Business Health Care Tax Credit. The tax credit is effective retroactive to January 1st, 2010 and covers up to 35% of a small business’s premiums, with the rate increasing to 50% on January 1st, 2014.

Although non-profit organizations are eligible for the credit, they will receive a lower percentage. Tax exempt organizations will be able to receive up to a 25% tax credit in 2010, which will be raised to 35% in 2014.

The tax credit has broad eligibility, covering 4 million small businesses. Any business that pays at least 50% of employee health care costs, employs the equivalent of 25 or fewer fulltime workers (allowing eligibility for companies with 50 part-time workers), and pays an average employee salary of $50,000 or less (not including owners and their family members) will be eligible for the Small Business Health Care Tax Credit.

The maximum credit of 35% is available for small businesses with 10 or fewer fulltime workers and an average salary of $25,000 or less. For businesses that pay employees between an average of $25,000 and $50,000, the tax credit gradually phases out. The gradual phase out also applies to businesses that employ an equivalent of 10 to 25 full time workers (20 to 50 part time workers).

Businesses are able to claim the credit for a total of six years. They will be eligible to claim the credit for four years, from 2010 to 2013, and then any two years after the 2013 date.

To keep businesses from abusing the system by picking a high-cost plan, the Small Business Health Care Tax Credit will only be eligible for the average health insurance cost of the state where the business is located. This information will be provided by the IRS at a later date.

For more information, refer to the IRS website.

Employers with 20 or more employees and offering group health coverage must offer a continuation of that coverage under COBRA, to covered individuals who lose that coverage upon the occurrence of a qualifying event. Most employers are well aware of the importance of offering COBRA when required to do so, and of the penalties for not complying with the law. However, it is also important to understand the circumstances under which COBRA need not be offered, because offering COBRA when it is not required can result in unnecessary expense. When an individual is covered under an employer’s group health care plan, and then loses that coverage due to the occurrence of a qualifying event specified in the COBRA statute, COBRA coverage must be offered. Qualifying events include:

For covered employees

• Voluntary or involuntary termination of employment, for reasons other than gross misconduct.
• Reduction in the number of hours of employment.

For spouses covered under the group health plan-

• Divorce or legal separation.
• Death of the covered employee.
• The covered employee becoming entitled to Medicare.
• Plus, the voluntary or involuntary termination of the covered employee’s employment, for reasons other than gross misconduct; or a reduction in the number of hours of the covered employee’s employment.

For dependent children covered under the group health plan-

• Loss of dependent child status under the rules of the group health plan.
• Divorce or legal separation of the covered employee.
• Plus, the voluntary or involuntary termination of the covered employee’s employment, for reasons other than gross misconduct; a reduction in the number of hours of the covered employee’s employment; the covered employee becoming entitled to Medicare; and the death of the covered employee.

Review this list of qualifying events and the other conditions for COBRA eligibility (for example, that coverage loss is a result of the qualifying event, and not from some other reason). It’s clear to see that there are numerous situations under which COBRA coverage need not be offered. For example:

• An employee tenders his or her resignation from employment. Because no termination of employment has yet occurred, an offer of COBRA would be premature.
• The employer changes health plans or insurance carriers, and the new coverage is less generous than before. Though the plan coverage may not be as good, coverage has not been lost, which is one of the requirements for COBRA eligibility.
• The employee voluntarily drops coverage, but does not terminate employment or reduce hours. Later, the employee terminates employment. Though the termination of employment is a qualifying event under the COBRA statute, it did not lead to the loss of coverage. Therefore, this is not a situation for which an offer of COBRA coverage need be made.
• The employee and spouse split up, but do not divorce or legally separate. A divorce or legal separation that results in a loss of coverage under the group health plan is a COBRA qualifying event. If spouses only physically separate, it is not a COBRA qualifying event.
• A COBRA-triggering event occurs that requires notification to the administrator by a covered individual (e.g., divorce/legal separation, loss of child dependent status), and no notification is given within 60 days of the qualifying event. The employer is not required to extend an offer of COBRA coverage.

COBRA is a complex law, and compliance is critical. In the quest to be compliant, it is important not to “over offer”� COBRA, because the potential cost is too high. Review COBRA’s requirements periodically with one of our benefits professionals, to ensure your company is complying, while not offering COBRA in unnecessary situations.

When it’s time to welcome an employee back into the office after an unexpected disabling accident, illness, or disease it can be uncomfortable for everyone without the benefit of knowing these basic tips. Preparing your staff and making a few accommodating adjustments to the work environment will go a long way toward maintaining a professional, productive, and positive work environment for everyone.

Initial Steps – The feelings of isolation are high in someone who has been a victim of a disabling experience. You as an employer can aid in the healing process by keeping your office staff connected.

1. Stay in touch with your employee. Encourage co-workers to keep in contact with their fellow employee by designating a member of your staff to coordinate a volunteer team of meal delivery, rides to medical appointments, or whatever support need might arise. E-mails and phone calls should also be encouraged.
2. As their employer, educate yourself on the insurance coverage your business offers. Consult with the representative of your insurance company and with the EAPs (Employee Assistants Programs) to understand the benefits that are currently available. Work as an advocate to ensure your disabled employee is getting their full benefits for as long as they can, especially the Health and Disability insurance. Create a packet of information that addresses expected questions and needs the employee may have during this difficult time. Include Web sites, contact phone numbers for support, and insurance clarification assistance.
3. As they recover at home, before they return to the office, offer some sort of limited responsibility opportunity, providing a light at-home work schedule with flexible hours and low pressure terms. Have another member of your staff, with similar job responsibilities help with their work load, so when they return there is not an overwhelming pile of papers to sift through.

Transitional Steps – Assuming your employee will be returning to the office, there are some preparatory steps that you can take to make the transition easier on everyone that will be affected directly by their return.

1. Based on the injury or disability, evaluate the individuals work station to determine if adjustments need to be made in respect to accommodating a wheel chair or other adaptive furnishings. Address the technology of the job to determine if adjustments need to be made, such as a phone headset or raised or lowered keyboard.
2. If possible, provide a reserved parking space for your returning employee as close to the building as possible. You might need a ramp or some other assistance for ease of entry into the building.
3. Brainstorm with the rest of your staff to determine other ways to help everyone feel more relaxed about the team member’s return. This could include a “Welcome Backâ€� banner, a potluck lunch, and a generous amount of flowers, balloons, or cards collected in the cubicle.

Final Phase Steps – Alleviate unnecessary stress by implementing these final steps when your employee returns to work.

1. Designate an escort to greet the returning employee into the building. Introduce them to the provisionary changes that have been made in the building to accommodate their special needs.
2. Provide a debriefing with all the new business information needed to bring the employee up to date. Things to include could be staff promotions and changes, schedule and responsibility changes, and a benefits update.
3. Allow the employee the “space” they need in the first week to make personal adjustments to their schedule. Part time work might be appropriate or at least some sort of rest period during the day. Check in personally with the returning team member to offer support and evaluate how the transition is working.