Last Tuesday night, President Obama signed into law legislation that provides a stopgap, 31-day extension of federal subsidies of COBRA health care premiums.
The measure was approved earlier Tuesday by the Senate on a 78-19 vote, while the House cleared it last week.
Under H.R. 4691, the 65%, 15-month premium subsidy for laid-off workers is extended to those involuntarily terminated from March 1 through March 31.
Without the extension, employees laid off after Feb. 28 would have been ineligible for the subsidy.
The measure also will allow employees to receive the subsidy if they first lost group coverage due to a reduction in hours and then were terminated after enactment of the legislation, if certain conditions are met.
Consideration of an extension of the premium subsidy to employees laid off through Dec. 31, 2010 continues.
Showing posts with label COBRA subsidy. Show all posts
Showing posts with label COBRA subsidy. Show all posts
Thursday, March 4, 2010
Wednesday, February 17, 2010
A gentle reminder
With all of the changes to COBRA, due to the ARRA extension and questions about the subsidy for COBRA participants, it is important to keep in mind that accuracy of information is still significant. Plan administrators should keep in mind that the $110/day penalty should still focus the mind when dealing with COBRA content of notices and timing of distribution.
In a recent a bankruptcy case, an employee terminated his employment and the employer sent a COBRA notice four months late, with a termination date (qualifying event date) that corresponded with a later termination date. The employer asserted that claims denied during those four months were denied in error, and that the employee's actual qualifying event date was the later date. Because the employee was in bankruptcy, the issue was presented to a bankruptcy court. The court awarded $13,000 in penalties to the employee because of the intentional "misstatement" of the qualifying event date in the COBRA notice. The Court found that *even though the employee's claims were paid* by the health insurance carrier, damages were still warranted because the dating of the notice was not merely a clerical error and was not made in good faith. The equities may have played a role here in that, to the court, the "misstatement" appeared intentional by the company to protect the company.
DOL COBRA regulations require the election notice to identify the qualifying event and the date that coverage will terminate unless COBRA is elected, but not the specific date of the qualifying event. If the qualifying event date is provided in the notice, however, it must accurately reflect the actual qualifying event date. In this case, the penalties covered the 120 days between the actual qualifying event date and the one erroneously reported on the notice.
This decision is a gentle reminder to plan administrators that information provided to COBRA-eligible participants should be timely and accurate. Even though the participant might not actually be prejudiced by the receipt of incorrect information, it can still give rise to penalties under the regulatory framework.
In re Olick, (2009 WL 5214583)
In a recent a bankruptcy case, an employee terminated his employment and the employer sent a COBRA notice four months late, with a termination date (qualifying event date) that corresponded with a later termination date. The employer asserted that claims denied during those four months were denied in error, and that the employee's actual qualifying event date was the later date. Because the employee was in bankruptcy, the issue was presented to a bankruptcy court. The court awarded $13,000 in penalties to the employee because of the intentional "misstatement" of the qualifying event date in the COBRA notice. The Court found that *even though the employee's claims were paid* by the health insurance carrier, damages were still warranted because the dating of the notice was not merely a clerical error and was not made in good faith. The equities may have played a role here in that, to the court, the "misstatement" appeared intentional by the company to protect the company.
DOL COBRA regulations require the election notice to identify the qualifying event and the date that coverage will terminate unless COBRA is elected, but not the specific date of the qualifying event. If the qualifying event date is provided in the notice, however, it must accurately reflect the actual qualifying event date. In this case, the penalties covered the 120 days between the actual qualifying event date and the one erroneously reported on the notice.
This decision is a gentle reminder to plan administrators that information provided to COBRA-eligible participants should be timely and accurate. Even though the participant might not actually be prejudiced by the receipt of incorrect information, it can still give rise to penalties under the regulatory framework.
In re Olick, (2009 WL 5214583)
Thursday, January 14, 2010
Christmas comes late for Plan Administrators
The DOL has finally published model notices concerning the extended COBRA subsidy. The notices are 'Updated General Notice,' 'Premium Assistance Extension Notice,' and 'Updated Alternative Notice.' ARRA, as amended by the Department of Defense Appropriation Act, 2010 (2010 DOD Act--yes the COBRA subsidy was passed as part of a defense bill!), mandates that plans notify certain current and former participants and beneficiaries about the premium reduction. The Department created model notices to help plans and individuals comply with these requirements. Each model notice is designed for a particular group of qualified beneficiaries and contains information to help satisfy ARRA's notice provisions, including those added by the 2010 DOD Act.
The notices are available now on the DOL website.
Separately, the DOL announced the publication of a final rule to protect employee contributions deposited to small pension and welfare benefit plans with fewer than 100 participants: the safe harbor is 7 days.
Currently, employers of all sizes must transmit employee contributions to pension plans as soon as they can reasonably be segregated from the general assets of the employer, but no later than the 15th business day of the month following the month in which contributions are received or withheld by the employer. The latest date for forwarding participant contributions to health plans is 90 days from the date on which such amounts are received or withheld by the employer.
The new rule is published in the January 14, 2010 Federal Register.
The notices are available now on the DOL website.
Separately, the DOL announced the publication of a final rule to protect employee contributions deposited to small pension and welfare benefit plans with fewer than 100 participants: the safe harbor is 7 days.
Currently, employers of all sizes must transmit employee contributions to pension plans as soon as they can reasonably be segregated from the general assets of the employer, but no later than the 15th business day of the month following the month in which contributions are received or withheld by the employer. The latest date for forwarding participant contributions to health plans is 90 days from the date on which such amounts are received or withheld by the employer.
The new rule is published in the January 14, 2010 Federal Register.
Tuesday, January 12, 2010
DOL COBRA Subsidy information released
In the waning days of 2009, the COBRA extension was passed, causing a bit of a kerfuffle in terms of compliance questions for eager-beaver administrators that had already made plans for New Year's. At last, the United States Department of Labor updated its website yesterday to include new information about the COBRA subsidy extension that was passed at the end of 2009.
Among the new documents:
•Updated Fact Sheet
•FAQs for employees and employers
•A new job loss poster
•A new flyer for employees
•A new flyer for employers
•A new flyer for employees on the application for review
Some of the forms have yet to be updated so employers should either seek legal advice if they need to send out such forms or stay tuned from the Department of Labor for updates.
Among the new documents:
•Updated Fact Sheet
•FAQs for employees and employers
•A new job loss poster
•A new flyer for employees
•A new flyer for employers
•A new flyer for employees on the application for review
Some of the forms have yet to be updated so employers should either seek legal advice if they need to send out such forms or stay tuned from the Department of Labor for updates.
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