Connecticut Employment Law Blog : Connecticut Employment Lawyer & Attorney : Daniel Schwartz : Stamford, Hartford New Haven, CT

Late Tuesday night, the Senate approved and the President signed a bill that , among other things, extends the COBRA subsidy (that had expired on February 28, 2010) to March 31, 2010 and applies that extension retroactively.  That means that any terminations on Monday and Tuesday this week that would have been subject to the COBRA subsidy (but for the expiration of the prior law) may need to be revisited.

The bill (H.R. 4691) also extends unemployment benefit eligibility as well. 

Besides extending the time for eligibility for the COBRA subsidy, the bill also has a number of other provisions attempting to clarify portions of the prior law.

What does this mean for employers? 

• Check back on the Department of Labor's COBRA page today and tomorrow for additional information from the agency.  The agency will no doubt release some additional information on how employers should handle this.
• If employers have had any terminations that would otherwise qualify for the COBRA subsidy the last two days, those terminations need to be reviewed and notices may need to be sent telling those individuals that they may be eligible for the COBRA subsidy.

This is still a fluid situation so employers with any COBRA-related questions should check with their counsel to get the latest advice on how to handle them. 

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Several weeks after the passage of an extension of the COBRA subsidy provisions, the United States Department of Labor has finally released its model notices for employers to use.  

All of them are available here. 

There are three such forms, a General Notice form, a Premium Assistance Extension Notice, and an Updated Alternative Notice. 

The Department of Labor describes the differences and the uses for each of them:

• Plans subject to the Federal COBRA provisions must provide the updated General Notice to all qualified beneficiaries (not just covered employees) who experienced a qualifying event at any time from September 1, 2008 through February 28, 2010, regardless of the type of qualifying event, and who have not yet been provided an election notice. This model notice includes updated information on the premium reduction as well as information required in a COBRA election notice.

Note: Individuals who experienced a qualifying event (that was a termination of employment) in December 2009 but who were not eligible for COBRA coverage until January 2010 were likely not provided proper notice. These individuals should get the updated General Notice AND the full 60 days from the date the updated notice is provided to make a COBRA election.

• Plan administrators must provide notice to certain individuals who have already been provided a COBRA election notice that did not include information regarding ARRA, as amended. This model Premium Assistance Extension Notice includes information about the changes made to the premium reduction provisions of ARRA by the 2010 DOD Act. Listed below are the affected individuals and the associated timing requirements.

-- Individuals who were "assistance eligible individuals" as of October 31, 2009 (unless they are in a transition period - see below), and individuals who experienced a termination of employment on or after October 31, 2009 and lost health coverage (unless they were already provided a timely, updated General Notice) must be provided notice of the changes made to the premium reduction provisions of ARRA by the 2010 DOD Act by February 17, 2010;
-- Individuals who are in a "transition period" must be provided this notice within 60 days of the first day of the transition period. An individual's "transition period" is the period that begins immediately after the end of the maximum number of months (generally nine) of premium reduction available under ARRA prior to its amendment. An individual is in a transition period only if the premium reduction provisions would continue to apply due to the extension from nine to 15 months and they otherwise remain eligible for the premium reduction.

Note: To some extent, the groups listed above overlap - creating a situation where an individual may be entitled to multiple notices. Providing the Premium Assistance Extension Notice by the earliest date required will satisfy the notice requirement(s).

• Insurance issuers that provide group health insurance coverage must send the updated Alternative Notice to persons who became eligible for continuation coverage under a State law. 

A lot to take in at once, but employers who have done a reduction in force recently or who have had former employees whose COBRA subsidy eligibility had expired should start preparing these notices as soon as possible.

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The United States Department of Labor this morning updated its website to include brand new information about the COBRA subsidy extension that was passed at the end of 2009.

Among the new documents:

• Updated Fact Sheet (useful for employers) 
• 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 their further updates.

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Twas the night before Christmas
With a whole bunch of laws,
A new COBRA was stirring,
with a health bill (and flaws?)

Congress sure has been busy the last few days. This Christmas Eve morning, the Senate passed a landmark health care bill.  No doubt, it will continue to be tweaked and modified as the House and Senate seek to reconcile their respective bills. 

I don't think you will find anyone who believes it is perfect and without flaws. But the passage today ensures that employers are going to have some new work cut out for them in 2010 as the provisions of the bill start getting implemented.  I will recap the provisions affecting employers once it becomes a little clearer in the reconciliation process.

Until then, employers can (and should) focus on the COBRA subsidy extension that I've been discussing the past week.  The Department of Labor has just updated their website to include a new "fact sheet" on the bill. 

According to an e-mail distributed by the DOL, "Updated FAQs and other information will be posted next week."  You can sign up to receive that information at the COBRA page of the DOL. 

And on top of all that, do not overlook the new prohibitions of mandatory arbitration for defense contract employees. (H/T LawMemo) that were contained in the same defense bill that was signed by the President earlier this week. That measure requires major defense contractors and subcontractors to agree not to enter into or enforce agreements with employees or subcontractors that require arbitration of:

any claim under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.

Got it?

So, with that, I wish you a very Merry Christmas and attach a new (but old) favorite Christmas tune. Happy holidays.

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So, President Obama signed a bill that extends the COBRA subsidy. No big deal, right?

Well, not exactly.

First, let's go over what's in the final provision:

• The eligibility period to receive the COBRA subsidy has been extended two months -- to February 28, 2010. That means that individuals who have been laid off recently who were going to start on COBRA on 1/1/10 are now eligible for COBRA.
• More importantly, the COBRA subsidy period (i.e. the time that individuals can get the government to subsidize part of the cost of the premium) has now been extended to 15 months (up from 9 months.)
  
  • This means that individuals who are currently receiving the COBRA subsidy are eligible to have it continue.
  • Individuals who had reached the end of the reduced premium period before the legislation extended it to 15 months will have additional time to pay the reduced premiums related to the extension. To continue their coverage they must pay the 35% of premium costs by (60 days after date of enactment) or, if later, 30 days after notice of the extension is provided by their plan administrator. If such an individual did not pay his or her December, 2009 COBRA premium because the subsidy expired, the individual can re-enroll in COBRA and receive the subsidy for December, 2009 (without any gaps in coverage) and another 5 months until May, 2010.
• Note that unlike the previous COBRA subsidy provision, eligibility to participate is based on those who were involuntarily terminated between 1/1/10 and 2/28/10.  (The previous provision was based on the termination date and the date that COBRA was scheduled to begin.)

The Department of Labor has issued a press release but as of the morning of December 22, 2009, it had not yet updated its website with the new notices or information. That information should be available here when posted (hopefully this week.) 

Until those new notices come out, employers are left in a little bit of limbo.  And employers will have a short time frame to send out new notices.

So, what can an employer do now?

1. Compile a list of individuals who are currently receiving the COBRA subsidy.  Those individuals are going to need to be informed that the period is going to be extended by 15 months and that to receive the subsidy they will need to continue to pay the premium as they have.
2. Compile a list of individuals who were receiving the COBRA subsidy but whose nine months of eligibility had expired. For those individuals, they will need to be informed that they can "re-start" COBRA. Sample notices from the DOL should be available for this purpose in the next few days.
3. Compile a list of individuals are COBRA eligible, but who were not going to receive the COBRA subsidy because the time period was going to expire beforehand. This will typically include those who were terminated within the last month, who were likely continuing on the employer's health plan until December 31, 2009. Those individuals will now need to receive new notices that they will be eligible for the COBRA subsidy; again, the DOL should be preparing sample notices in the next few days.
4. In the interim, employers may want to send out a letter to all such individuals informing them that changes are on the way and that you will be providing them with updates as they become available. This might keep your HR staff a little less busy answering phone calls and give them some more time to comply with this law.
5. Going forward for the next 75 days or so, employers will need to inform those who are laid off that they may be eligible for this COBRA subsidy. Again, those terminated by 2/28/10 will be eligible regardless of when the actual COBRA period is scheduled to begin.

Developments in this area are coming fast and furious and with the end of the year upon us, it couldn't come at a worse time for many. But this is one area that needs focus. And fast.

(H/T Delaware Employment Law Blog)

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Over the weekend, Congress approved of a measure that I reported on last week that will extend COBRA for a few more months.

The President is expected to sign the measure and no doubt the DOL will be updating its website with new information.

Thus, employers should continue to keep tabs on this development as it will affect those who have been laid off this month and will be eligible for COBRA starting 1/1/10.

(H/T Workforce)

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UPDATED

The health care bill debate seems all consuming. At least in terms of press coverage.

But yesterday, the House of Representatives passed a defense spending bill (H.R. 3326) that, according to the DC Employment Law Update:  "prevents most defense contractors and subcontractors from forcing their employees or independent contractors to sign, as a condition of employment, agreements to arbitrate certain employment-related claims. The Senate approved this provision ... in October."

The arbitration provision conditions the receipt of a federal defense contract worth more than $1 million on two agreements by the company. Details of the provision can be found here and here. 

The bill would also extend the COBRA premium subsidy offered by ARRA from nine to 15 months. In addition, the job lost eligibility date would be revised to February 28, 2010.   The bill will now need to be reconciled with the Senate version and back for another vote before going on to the President for signature.

Similar provisions are being introduced in another bill so it seems more likely now that such a measure is going to be a reality before year's end in one way or another.

For now, employers should sit tight on their COBRA documentation. We're likely to see a year end scramble in the next week or so as Congress wraps this up for the year.

UPDATE: On December 17, 2009, the House also passed a jobs bill that contains further extensions to COBRA.  It now goes on to the Senate for further debate. 

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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.

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