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Unemployment, COBRA plan causes readjustments

Employees and laid off workers are still trying to figure out new guidelines of COBRA health insurance benefits.

The American Recovery and Reinvestment Tax Act, or stimulus bill, calls for extended coverage for those who have lost jobs through no fault of their own.

As of March 1, companies are required to subsidize 65 percent of health insurance benefits through COBRA (Consolidated Omnibus Budget Reconciliation Act). Previously, unemployed workers had to pay all those expenses.

Companies have scrambled to calculate how many people the new legislation will affect, according to David Cothran of the Benefit Development Group.

The revised notice applies to eligible people who involuntarily lost their jobs after Feb. 17, 2009, but also must apply to people who lost their jobs between Sept. 1, 2008 and Feb. 17.

It offers more help for the unemployed, but it could adversely affect companies already tight with money.

“If you think about it from mathematics, if you have someone who’s got a $1,000 health insurance premium, now the employer has to pay $650 of it and deduct it from payroll taxes,” Cothran said. “Let’s say we had an employer that had a 50-person company and laid off 20 people or so. Their payments could actually exceed their payroll taxes. They’re already cash flow-strapped, otherwise they wouldn’t have laid people off. And now they’ve got to carry on the debt burden placed on them by this legislation.”

Cothran said the process is further complicated because the government has not released the entire language of the law as it applies to COBRA benefits.

Rep. Artur Davis said last week during an address to officials in Wilcox County several people in the Black Belt are out of work for the first time.

The State Department of Industrial Relations, which disburses unemployment benefits, offers two different ways to make the process easier.

Tara Hutchison, public information officer for ADIR, said applying online cuts time. The Web site is dir.alabama.gov.

“Our call centers are experiencing about 20-25 percent more call volume than they were at this time last year, which is resulting in some significant wait time on the phone,” Hutchison said. “If you go online you can totally eliminate that.”

For those without Internet, local Career Centers offer online access and other resources to help find jobs. Selma CareerLink is located at 1114 Water Ave.

To help reduce the wait time for people applying by phone, ADIR has dedicated Mondays to help people with Social Security numbers ending in 0-4. People whose Social Security numbers end in 5-9 can call on Tuesdays. Anyone can call Wednesday through Friday, and lines are open each day from 7 a.m. to 4:30 p.m. The number is 1-866-234-5382.

Hutchison said 80 percent of approved applicants receive benefits within 21 days. The maximum amount of unemployment compensation a person can draw in Alabama is $255 per week, and people have to certify each Sunday that they are looking for jobs in order to receive benefits that week.

Alabama pays benefits for up to 26 weeks, and federal extensions are available for up to an additional 23 weeks.

People who apply for benefits in Alabama are automatically registered in an online database called Alabama JobLink (joblink.alabama.gov), and prospective employers can search resumes on the Web site.