Earlier today, I was fortunate to give a teleconference on the new COBRA subsidy rules for BLR.  Not surprisingly, there were still lots of questions at the end of it. 

One of the biggest issues that people had concerned who was eligible to receive this assistance. As I’ve indicated previously, only those employees who have been involuntarily terminated are eligible. But the IRS regulations have also indicated that individuals who have a good reason for resigning might also be deemed to be involuntarily terminated.

And what is a good reason? According to the IRS in guidance released recently, it is a person who has experienced a "material negative change in the employment relationship for the employee".  

And what might a "material negative change"? The IRS doesn’t say though it provides one example: A employee who has quit because of a reduction in the employee’s hours (though an employee who has his hours reduced and does NOT quit, may be eligible for COBRA, but not the subsidy. Confused enough?).  

But beyond that, the IRS guidance thus far has been severely lacking. Could it be a failure to receive a bonus? Five furlough days?  There’s lots of speculation, but for employers, it might be more helpful to focus on OTHER language in the guidance which states that an involuntary termination is, overall, "the independent exercise of the unilateral authority of the employer to terminate the employment".

For anything more definitive, we’ll have to await perhaps further guidance and even some litigation. The IRS guidance may be the first on the subject so far, but it’s definitely not the last word.  

Stay tuned.