So yesterday, I made a convincing case that employees who smoke outside the workplace can’t be treated differently than your non-smokers. 

But what about your health insurance plans? Doesn’t the state law prohibit your plan from imposing higher premium costs on those smokers?

Well on first glance it appears yes.  The state law would seem to apply.

But, dig deeper (and without getting too technical) and you’ll understand that there is a federal law — ERISA — that trumps that state law when it comes to insurance plans. 

Indeed, back in 2006, the Office of Legislative Research (one of the underappreciated government offices) wrote a report that said exactly that:

You asked if Connecticut law prohibits insurers or employers from factoring in whether a person smokes when determining insurance premiums or employee contributions for health care benefits. …

Connecticut law prohibits employers from discriminating against any individual who smokes outside the workplace with respect to compensation, terms, conditions, or privileges of employment (CGS § 31-40s). The Connecticut Department of Labor (DOL) interprets this law as not prohibiting an employer from having smokers contribute more toward health benefits than non-smokers due to preemption by the federal Employee Retirement Income Security Act (ERISA). To our knowledge, this issue has not been litigated in a Connecticut court. …

Since that time, the question remains undecided, but there is little reason to doubt the conclusion. Indeed, there’s much more to this area than a simple blog post can provide.  But employers who believe in healthy workplaces and want to keep their insurance premiums down do have a small arrow in their quiver to make it happen.

Regardless of your political affiliation, you have to appreciate the magnitude of the moment.

Sweeping health care insurance legislation has passed Congress. (The Senate will still take up  the "reconciliation" part of the bill which will make some additional modifications because the House only approved of the Senate version.)

So, now’s the time to ask: What does this mean for employers?

No one really knows. Oh, you’ve been hearing lots of commentators talk about how lots of jobs will be lost (or saved) as a result of this.  Or they will talk about what this means for our country.   But in truth, it’s much like looking at a crystal ball — you’re much more likely to get a distorted picture than a real one.

So rather than guess about what will happen for employers in the future (or speculate about future changes that may or may not be made), let’s talk about what we know.   

Employers are not, technically, required to provide health insurance to their workers under the bill that passed.  But if employers with 50 or more employees do not provide health insurance, they will be required to pay a fine of $2000 per worker each year if any worker receives federal subsidies to purchase health insurance. Fines will be applied to entire number of employees minus some allowances (under the formula — at least in the reconciliation bill — the first 30 employees are probably not going to be counted).

But again, here’s the most important part: If you are an employer will less than 50 employees, you will not be impacted directly from this bill because you will not be penalized if you don’t offer health insurance.  

For those employers that do offer coverage, you’re not out of the woods just yet. Under the passed bill, if the employee finds the insurance too expensive because it would represent too much a percentage of their income, the employee may purchase insurance on the open market (or at least the marketplace of exchanges that the measure also establishes).  The employer would then be required to provide a voucher to the employee on the percentage that the employer would have kicked in had the employee chose to continue with the employer-sponsored plan.

There is an additional provision for employers of 200 or more employees: If you, as an employer, do offer health insurance to your employees, then you will have to automatically enroll those employees in the plan.  

So, you might be wondering, should I start planning for this? Well, unlike some of the COBRA-subsidy provisions that have gone into effect immediately, this law has a great deal of buffer built in.  In fact, many of these provisions do not start until January 1, 2014 — or nearly four years from now.

But there are others that go into effect more quickly, including a provision to require employers to extend coverage to include adult children (up to age 26) of employees. 

As you might expect from a 2000 page bill, there are certainly other provisions that might affect employers. Various blogs and publications have begun summarizing some of those provisions including Business Insurance and Washington Employment Law Update.  I expect we’ll hear more this week too as everyone starts to analyze it in more detail.

For employers that have low-cost workers, there is no doubt that this measure will have some impact because of the penalties that may be applied if health insurance is not offered. But how much of an impact that will be will have to be determined by each company on a case-by-case basis.

For now, each employer should consider appointing a small group of employees (including those from human resources and finance areas) to figure out what health care reform will mean to that employer.  And stay tuned, I don’t expect we’ve heard about this for the last time.  

UPDATED

This week, both the Hartford Courant and the Hartford Business Journal,  have run lengthy articles suggesting that the COBRA subsidy — which went into effect in February of this year — is coming to end for most workers. 

Unfortunately, the articles miss the big picture of the law and, in doing so, add to the confusion surrounding the law.

So, let’s take a moment to understand the context.

Before February 2009, laid off workers who wished to continue their health benefits had an option to do so but typically by paying the full amount of the premiums. They could do so under the law known as COBRA.

Then in February 2009, Congress passed a law that provided that workers laid off between September 1, 2008 and December 31, 2009, would be eligible to receive a subsidy from the government, in which the government would pay 65 percent of the premium for a nine month period.  This is what’s been known as the "COBRA Subsidy".

So, this month, some workers who were laid off between September 1, 2008 and March 1, 2009 and who had been receiving this subsidy from the government, will lose that subsidy.  They will not lose their insurance; rather, they will revert to the existing COBRA law for coverage.

Nevertheless, the articles suggest that the benefits are ending for other laid off employees as well. That is not the case. Anyone who is laid-off through the end of 2009 may still be eligible to receive the nine-months of subsidies (and employers will still be responsible for processing such requests) so long as their are COBRA-eligible. At the end of each nine-month period, they can continue their health insurance benefits at the full premium rates.  The DOL has issued FAQ on the subject which you can find here.

[Note that if an laid off employee still has health insurance coverage through, say January 31, 2010 under an existing policy of the employer, then COBRA would not start until that time and the laid off employee would not be eligible for the subsidy.]

It is unclear, at this point, whether Congress will extend this subsidy any further. A bill has been introduced to do so but its prospects remain foggy.

What’s also unclear is how many individuals are actually using the COBRA subsidy.  An estimate before the bill suggested that up to 7 million people would be eligible, but the numbers on the actual amount of people using the subsidy have yet to be released by the government.  

For employers, absent passage of another extension, the next several months are likely to be another confusing time. 

Employees who were laid off before December 31, 2009 and who are otherwise COBRA-eligible may continue getting the subsidy, but those laid off after December 31, 2009 (or those who are not COBRA-eligible until after December 31, 2009) will not.  As such, employers will need to amend their COBRA notices and forms yet again to revert back to the former forms that they used before the subsidy.

Earlier this month, Governor M. Jodi Rell vetoed several  bills affecting employers — one that has garnered a great deal of publicity and a few that that have not. (The Office of Legislative Research has just released a full list of the vetoed bills here and the summaries of the bill are taken from the report.) 

Here’s a brief recap of the bills affecting employers:

  • An Act Establishing the Connecticut Healthcare Partnership — This act requires the comptroller to convert the state employee health insurance plan, excluding dental, to a self-insured arrangement beginning July 1, 2009 and would have allowed small employers to participate, ultimately.  The bill passed the Senate (21-12) and the House (109-36).  In vetoing the act, the Governor stated, in part:

Although including employees of sCopyright 2009, Daniel A. Schwartz. All Rights Reservedmall businesses in the plan appears to address the issue of access, this plan is simply too expensive for the typical small employer and thus unlikely to increase the number of residents who have health care insurance. I note that nine local chambers of commerce – whose membership is largely composed of small businesses – oppose this bill.

Although the Partnership bill has changes somewhat from last year, it still retains its most problematic component – a significant cost to the state. This is the direct result of pooling an unknown employer risk group with the state employees’ health insurance plan and prematurely converting such plan to a self-insured model. Those who most likely would be attracted to the pool would be those whose claims experience – the main driver of health care costs – is worse than that of the current state employee pool. When the experience of these new members is averaged across the entire pool, it will drastically increase premiums for the state and all those who have joined the pool. … This is a potentially fatal flaw, since the bill requires that premium payments remitted by these newly pooled employee groups ‘be the same as those paid by the state.

  • An Act Concerning Green Jobs – This act requires the Department of Economic and Community Development (DECD) to apply for federal economic stimulus funds available under the American Recovery and Reinvestment Act of 2009 (ARRA) and use the funds to establish a program to create green jobs and promote green energy and conservation. It passed the General Assembly unanimously.  In vetoing the bill, the Governor stated:

This legislation is both unnecessary and inconsistent with the current state plan for applying for green jobs and green energy stimulus funds. . . .The Green Collar Jobs Council created by Executive Order No. 23 has already reviewed available ARRA green job grant opportunities and has recommended which entities should apply for such grants. . . .In particular, the Green Jobs Council… identified a list of lead applicants for each grant, including the Department of Labor, Connecticut Business and Industry Association, Energy Workforce Development Consortium and Community Colleges. With respect to energy-related stimulus funds, the Office of Policy and Management (OPM) has taken the lead. These entities, as opposed to [DECD], are the most well-suited to both apply for and receive federal stimulus monies related to green initiatives. ”

  • An Act Concerning the Standard Wage for Certain Connecticut Workers – This act creates a new method for determining the hourly wage and benefits for employees under the standard wage law, which governs compensation for employees of private contractors who do certain types of work in state buildings. Under the act, such employees hired after July 1, 2009 will receive the same hourly wages and benefits as employees working under the union agreement covering the same type of work for the largest number of hourly nonsupervisory employees, as long as it covers at least 500 employees, in Hartford County. Those already working for standard wage employers on or before July 1, 2009 will be paid an hourly wage based on the current standard wage law, but after July 1, 2009 their benefits will be the same as those working under the Hartford County union contract for the same type of work. This creates two tiers for hourly pay while keeping all employees at the same level of benefits.  It passed the Senate (30-6) and the House (112-35).

    In vetoing the measure, the Governor stated. 

    This legislation creates an exception to current law and provides varying wages and benefits to certain employees of contractors at a potentially significant cost to the state. The law mandates that a select group of employees will be paid union contract wages and benefits, instead of the Department of Labor’s determined standard wage rates, and creates two distinct classes of janitors – those hired before July 1, 2009 and those hired after such date.

    By removing the link of certain employees’ wages and benefits to the Department of Labor’s standard wage rates, we are exposing the state to an unknown and unmanageable level of cost. There will be an entire subset of services whose price will be dictated by privately conducted union negotiations and contracts to which the state is not a party. Both groups of janitors perform the same critical services for the state and therefore should be paid the same wage rates, regardless of when an individual was hired. I cannot sanction wages and benefits that are determined completely outside of the state’s control and that have not been included in the budget for the next biennium.

 

The Employee Benefits blog has a terrific post this week explaining the "Gross Misconduct" rule for COBRA Coverage.

For those unfamiliar with the lingo, The Consolidated Omnibus Budget Reconciliation Act (COBRA) (among other aspects) describes rights that employees have to continue their health insurance after their employment as been terminated (and for some other reasons too).    But there is an exception: When the employee is terminated for "gross misconduct", the benefits cease.  What does that mean? Well, the Act doesn’t define it.COBRA - Not cobra kai from Karate Kid

But the Employee Benefit blog shares some insight from one case about what it means. 

Three things are very important about this decision.  First, the court did not find that any “criminal” conduct was required to meet the “gross misconduct” definition.  Gross misconduct can be an intentional, deliberate, extreme and outrageous that “shocks the conscience.”  It can be “reckless or in deliberate indifference to an employer’s interests.”  …

Second, the employer has the burden of establishing the termination was for “gross misconduct.”  … It must be the primary reason, not one of many.

Finally, the employee and potential COBRA beneficiaries have to be notified of the determination that COBRA is not being offered because of the termination for gross misconduct.  

So what’s an employer to do? The blog suggests some thoughts, but I’ll share some general observations as well.

1. Document, document, document.  If an employer is going to claim "gross misconduct", there ought to be ample documentation supporting the decision.

2. Make sure the termination documents reflect the actual reason and the reason amounts to "gross misconduct".  Meeting this standard is difficult and courts will understandably look to any reason to deny it. Having a letter of termination that merely states the employee was let go for "performance" reasons, isn’t going to cut it. 

3. Follow policies and COBRA to the letter. The requirements, for example, about notification under COBRA are strict. Missing deadlines or not providing information may provide the escape hatch that might not be available otherwise.

And as always, seek some legal guidance on this. Denying COBRA nowadays is rare; if an employer does try to use that provision, it can be assured that a fight about coverage may not be too far behind.

Recently, a colleague received an e-mail that suggested that all employers must post information that "lists employee’s rights to health insurance under Connecticut Law."  When I heard about it, something didn’t seem right.  After all, since when do employees have a right to health insurance in Connecticut (and, isn’t that a heated topic of the Presidential campaigns?). 

So I started digging.  A peek at the Department of Labor website came back with nothing.

A search on Google for a "Connecticut Healthcare Advocate Poster" provided a link to the website of a company, Progressive Business Compliance, that does, in fact, sell a poster for $12.99 that appears to be on point.  The website page states specifically. "New Poster February 2008! Employers are required to display this poster.  Lists employee’s rights to health insurance under Connecticut."  The website allows a viewer to buy this "Healthcare Advocate" poster directly from the site and it has a nice thumbnail picture of what the poster looks like.

Hmm. This seemed strange; still hadn’t heard of the law..  But I wondered, why have I seen this poster before? So, I called the Office of the Healthcare Advocate, which is dedicated to serving Connecticut’s health insurance consumer. 

And lo and behold, they were extraordinarily helpful.  A poster on rights to health insurance? Never heard of it, they said. But they do have a poster from the Managed Care Ombudsman that lists the services of the Managed Care Ombudsman.  It’s required by Conn. Gen. Stat. Sec. 38a-1046.  Oh, and it’s not new. It’s been around since 1999.  It lists certain items that a health insurance policy must have — if health insurance is offered.

Ding, ding! We have an answer!  There is no poster listing an employee’s rights to  health insurance, only a poster regarding the services of the Managed Care Ombudsman.  And it’s been around for a while (which is why it looked so familiar). 

So, I ask the OHA, can I download this poster from the website? Their answer was no but she graciously agreed to e-mail it to me.  (Don’t ask me why it isn’t on the website in this age of technology.)

And, she did. So, are you curious what it looks like? This is the poster that she e-mailed me. You can compare it to the thumbnail image available for sale on the PBC website and make your own judgment about it. (IMPORTANT DISCLAIMER: As with this entire blog,  I make no representation that this poster does, in fact, comply with the applicable law and readers are strongly cautioned to seek legal advice about whether their postings comply with applicable law.)  If you want your own poster, you can certainly contact the OHA at 1-866-HMO-4446.  Perhaps if enough people call them, they will even post it to the website.

This situation presents a good reminder tor HR professionals and company staff that it is always best to consult with an attorney about their legal obligations, particularly on posters.  And it reminds me of the (seemingly) old adage that just because it is on the Internet, that does not mean it’s true.  It is always best to go to the underlying source to resolve any questions you might. And you might save a few bucks by doing so.

(4:30p UPDATE) See comments by Kevin Lembo, from the Office of Healthcare Advocate below regarding the poster.  There will be some further developments in this topic likely tomorrow.  Stay tuned.