Economic Stimulus Includes Making Work Pay Credit and Expanded COBRA Benefits
Ceridian to track new regulatory requirements, help customers remain current and compliant
Minneapolis (February 17, 2009) – Ceridian Corporation, a leading provider of managed human resource, tax filing, employee benefits administration and payroll outsourcing solutions, announced today it will be working with the appropriate government agencies to determine how payroll tax and benefits changes included in the recently passed American Recovery and Reinvestment Act of 2009 can be quickly implemented.
“Recent changes in the law will impact the way employers manage payroll and COBRA benefits,” commented Keith Strodtman, senior vice president and general manager, Ceridian HRO and Product Management. “Ceridian is tracking those changes and will make sure its clients are fully informed and able to comply with all of the new regulatory requirements and processes.”
In the coming days the Internal Revenue Service (IRS) and related agencies will be spending considerable time drafting, finalizing and publishing the regulations and related documentation and forms required to support these changes. Ceridian will be monitoring these changes and working with the appropriate federal agencies to help employers meet the Act’s complex new requirements.
Some of the Act’s changes include the following:
Making Work Pay tax credit
The maximum annual Making Work Pay tax credit is $400 for single filers, $800 for married couples filing jointly. This table assumes that the employee claims Single, with 1 allowance, on Form W-4 and the credit is implemented effective May 1, 2009.
At an annual salary of …
Or weekly wages of …
The estimated increase per pay check (weekly) is …
$20,000
$384
$11.60
$50,000
$961
$11.60
$85,000
$1,634
$8.40
$100,000
$1,923
No change
Some sources have reported that the Making Work Pay credit will result in a simple per pay check increase for workers. While the calculations are fairly straight-forward for single employees with only one employer, further clarification is needed from the IRS about applying the credit when an employee works for more than one employer, or for married couples filing jointly with only one household income.
Changes to COBRA
A key change to COBRA includes a maximum nine month, 65 percent subsidy for eligible individual COBRA premiums. The subsidy is available to those involuntarily terminated from their job from September 1, 2008 through December 31, 2009. Guidance on all COBRA changes is expected within 30 days of enactment from the Department of Labor and the IRS.
President Obama signed the legislation on Tuesday, February 17, 2009. While the American Recovery and Reinvestment Act of 2009 will take effect on March 1, 2009, federal agencies required to write the new rules and regulations will have a reasonable time to implement the significant new changes.
Source: Ceridian
