Wake up SBA! The new Cobra supplement package should cover ALL small business employees.

COBRA was designed to give some employees who have lost their health insurance when they lose their jobs the option  to continue their former employer’s group health benefits for up to 18 months. It is named after the Consolidated Omnibus Budget Reconciliation Act of 1985, signed by President Ronald Reagan.

Those who elect COBRA have to pay the entire premium to continue their coverage until they are able to get a new job or get alternative health insurance,  expensive, especially if you have lost your job. As part of the Obama stimulus bill, employers now must subsidize up to 65% of their former employees’ COBRA premiums for up to nine months. The employer is reimbursed by the federal government through a payroll tax credit for its portion of the subsidy; the former employee pays the remaining 35%.

Unfortunately and for reasons that apparently have little logic or fairness at its root, the COBRA subsidy  applies only to small business owners who employ 20 or more workers and offer them health insurance benefits or this provision does not apply to you. Its hard to believe.

Also, in order for employees to qualify, they have to have been laid off. They don’t qualify if they were let go for  cause.

The subsidy applies to employees laid off between Sept. 1, 2008, and Dec. 31, 2009, and it ends when the  employee is offered employer-sponsored health-care coverage by a new employer; becomes eligible for Medicare; or when his COBRA coverage expires. The subsidy is not available to employees whose income is more than $125,000 a year or who have family annual income of more than $250,000.

Besides the increased paperwork and employee notification requirements,  the employer must collect the former employee’s 35% before he can claim the payroll tax credit. The small business owner has to go back and notify anybody who was involuntarily terminated. They have to be made aware they are eligible for this program.

Sounds like a reasonable although  quite a burdensome response to an admittedly  difficult and expensive issue, however, my greatest concern is what happens to the millions of small business employees who work for small  businesses with fewer then 20 employees? Why would they be excluded? What possible reason exists to differentiate between one worker and another merely because of the size of the employee pool that employed them? We all pay into the fund with similar taxes, why should some get greater benefits over others for such a silly reason?

So many of the less then 20 employee small businesses are getting hammered by this recession, I wonder again, what does the SBA believe its mission is, as it is apparently not yet understanding the width and depth and importance of the less then 20 employee small business sector, those who also need help  and are once again being excluded?

Wake up SBA! Have you forgotten your mission? Have you forgotten who the backbone of our workforce is? The small business under 20 employees, that is who keeps America running…why are you not supporting them?

Trade contracts supported by federal money routinely go to large businesses despite the small business requirements, the new $35,000 emergency loan is not for SBA borrowers, and now the Cobra support is denied those businesses under twenty employees.

Where is the help you promised us, SBA?

Where is the support we were told you would provide, Obama?