Certain employees who have been laid off can, if they so opt, continue paying health care premiums through the business’s group health plan. Under the “stimulus bill,” those employees can have 65% of their COBRA premium paid by the federal government. At $300, $400 and $500 a month, that 65% subsidy can mean a great deal.

The problem is the employer must pay the subsidy and wait to get “paid” by the federal government until he files his payroll taxes, when he takes a tax credit… And that’s only if the employer has enough employees left to have enough payroll taxes owed to get credit for all the premium(s) he paid.

So you see, it’s a cash flow problem for the employer – and believe me, I see small businesses that are struggling with this.