UBP blog

07/15/2009

Federal Changes to Employee Benefits Under the ARRA Act

Filed under: ARRA Act COBRA Subsidy,COBRA — ubpblogger @ 8:53 am
Tags: ,

The many changes to benefits under the recent American Recovery and Reinvestment Act (ARRA) legislation are certainly complicated. For instance, there’s been an increase in the monthly statutory limit to commuter benefits, which has gotten very little attention in the media and risks being overlooked by many employers. Although employers and HR departments should be responsible for absorbing and disseminating ALL legislative changes and information, the reality of managing that – on top of countless other responsibilities – is difficult at best.

Having an insurance broker who expertly navigates all of these changes and relieves your company of countless hours of research – and possibly even takes time-consuming and costly burdens such as COBRA administration and off your back – is one way to provide your company with a solid foundation for compliance. It also saves you from missing any of the subtle updates and revisions to the legislation (such as the recent IRS announcement that Line 12b on subsidy Form 941 should be calculated and entered based on each individual receiving a subsidy, regardless of the number of people benefiting from that subsidy).*

When your HR team is freed up from the endless hours they spend on benefit administration, COBRA, and fielding routine questions about coverage, they will be far more available to do what they do best – RECRUITING AND RETAINING TOP EMPLOYEES.

ARRA Act Changes to Commuter and Transit Benefits:

Effective as of March 1, an amendment to Code Section 132 (f)(2) raises the monthly limit for qualified transit passes and commuter vehicle expense benefits (the two of these reaching a combined maximum benefit) from $120 to $230 per-month. Employers now have the option of allowing participants to make or change their commuter and transit benefit elections accordingly. The ARRA Act also contains a sunset provision so that the increase in the monthly limit will expire on December 31, 2010 (unless it is extended in future legislation, which is possible).

Keep in mind that with these changes, there are stipulations worth noting. For instance, the effective date of the change in the maximum amount will be effective the first of the month following notification.

You can find more information on this subject at http://www.delawareemploymentlawblog.com/2009/03/employee_benefits_update_chang.html. As always, legislation changes from state to state, and you must consult your own benefits expert or legal department to see which changes affect your state and your company specifically.

*For specific information on the IRS regulation regarding Form 941 or to download a copy of the Form in its entirety, go to http://www.irs.gov/pub/irs-pdf/f941.pdf

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