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** WorkLaw Alert **
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CONGRESS EXTENDS COBRA SUBSIDY
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On December 19, 2009, the Senate extended the COBRA Premium subsidy program as part of a larger $626 billion defense-spending bill. The Department of Defense Appropriations Act of 2010 (HR 3326) included amendments to the COBRA subsidy provisions contained in the American Recovery and Reinvestment Act (“ARRA”). The Senate’s 88-10 vote follows the December 16, 2009 House vote. President Obama signed the bill on December 21, 2009.
Basic COBRA coverage allows eligible workers to continue receiving group health insurance for an additional 18 to 72 months upon payment of 102% of the group policy’s monthly premiums. Enacted on February 17, 2009, the ARRA reduced premium payments and added election opportunities for the continuation of health coverage. Under the ARRA, employees loosing coverage due to involuntary termination between September 1, 2008 and December 31, 2009 (“assistance-eligible individuals” or “AEI”) would be eligible for continuation coverage at 35 percent of their COBRA premiums for up to nine months. The coverage provider would cover the remaining 65 percent and be reimbursed through a tax credit.
HR 3326’s COBRA amendments (“Subsidy Amendments”) significantly alter the COBRA subsidy benefits of the ARRA. First, the Amendments extend the length of subsidy assistance from nine to fifteen months. Congress believed that the lingering economic downturn and high unemployment rates warranted an extension of the premium subsidies. Second, the Amendments moved the last day of eligibility from December 31, 2009 to February 28, 2010.
The Subsidy Amendments also provide new election rights and notification responsibilities. The plan administrator will be required to provide a notice (“Notice”) summarizing the new Subsidy Amendments to all employees who become an AEI on or after Oct 31, 2009. These qualifying AEIs must receive the Notice within 60 days after enactment of the Subsidy Amendments or, for a subsequently occurring qualifying event, in accordance with the regular COBRA timing requirements.
With respect to subsidized premium payments owed during a “transition period”, the Amendments allow a qualifying AEI to make the payments retroactively. A transition period is any 15-month period of actual coverage that runs through the date of enactment of the Subsidy Amendment. Subsidy premium payments will be deemed timely if a qualifying AEI pays the premium within 60 days after enactment of the Subsidy Amendments or 30 days after receiving the Notification, whichever is later.
The new Subsidy Amendments will require human resources to navigate another round of COBRA administration changes. Administrators should prepare and timely distribute a new Notice containing the Subsidy Amendments. Qualifying AEIs must be identified and provided with the new Notice within 60 days after the effective date of the Amendments. Divisions of responsibilities among carriers, administrators, and plan sponsors should be reviewed and memorialized. Of course, these new administrative burdens must be integrated into the existing healthcare and leave procedures at least through May 31, 2011.
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WorkLaw Alert is provided by the Atlanta-based labor law firm of Taylor English LLP, an alliance partner of GreenSearch, and summarizes significant laws and cases affecting the workplace. Taylor English LLP represents many green industry employers and associations. As with most legal summaries, WorkLaw Alert is not intended to be legal advice. If you have questions about any particular situation, please contact your local counsel or Ray Stanford, Taylor English Duma at
678-336-7144 or rstanford@taylorenglish.com
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GreenFacts
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In 2010, employers nationwide indicate that they now expect to grant merit pay increases of 3.0%-3.5% to employees.
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** WorkLaw Alert **
CHANGING PRIOR PRACTICES OR TREATMENT!
Can a new supervisor change the rules?......
Read more here.
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