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DOL Issues COBRA Subsidy Model Notices

By Stephen Miller

(You can view the entire article here)

The American Recovery and Reinvestment Act (ARRA), signed into law in February 2009, mandates that plans notify certain current and former participants and beneficiaries about the COBRA premium reduction subsidy (see “COBRA Coverage Expansion: HR Action Steps to Take Now”).

The U.S. Department of Labor (DOL) has 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.

“The model notices we are releasing enable employers to quickly spell out for former employees and their families how to take advantage of COBRA coverage and the subsidy,” said Secretary of Labor Hilda L. Solis in a statement. “The ARRA provides a 65 percent tax subsidy for the cost of health benefits, making them more affordable for the unemployed and their families. Millions of individuals, including those who previously declined employer-provided coverage under COBRA, will be eligible to receive a subsidy on their premiums for up to nine months.”

General Notice (Full version). Plans subject to the federal COBRA provisions must send the General Notice to all qualified beneficiaries, not just covered employees, who experienced a qualifying event at any time from Sept. 1, 2008 through Dec. 31, 2009, regardless of the type of qualifying event. This full version includes information on the premium reduction as well as information required in a COBRA election notice.

General Notice (Abbreviated version). The abbreviated version of the General Notice includes the same information as the full version regarding the availability of the premium reduction and other rights under ARRA but does not include the COBRA coverage election information. It may be sent in lieu of the full version to individuals who experienced a qualifying event on or after Sept. 1, 2008; have already elected COBRA coverage; and still have it.

Alternative Notice. Insurance issuers that provide group health insurance coverage must send the Alternative Notice to persons who became eligible for continuation coverage under a state law. Continuation coverage requirements vary among states, and issuers should modify this model notice as necessary to conform it to the applicable state law. Issuers may also find the model Alternative Notice or the abbreviated model General Notice appropriate for use in certain situations.

Notice in Connection with Extended Election Periods. Plans subject to the federal COBRA provisions must send the Notice in Connection with Extended Election Periods to any assistance eligible individual (or any individual who would be an assistance eligible individual if a COBRA continuation election were in effect) who:

Had a qualifying event at any time from Sept. 1, 2008 through Feb. 16, 2009, and;

Did not elect COBRA continuation coverage, or elected it but subsequently discontinued COBRA.

This notice includes information on ARRA’s additional election opportunity as well as premium reduction information. This notice must be provided by April 18, 2009.

As you can see, the Department of Labor has issued model notices that relate to the 65% COBRA Subsidy provided to eligible employees as part of the federal stimulus package. These notices can be used by employers/plan administrators when communicating with eligible employees about their COBRA options.

Dirk A. Beamer

Without regard to whether family members are legally obligated to pay the debts of their deceased loved ones, credit card companies and debt collectors are targeting those family members to satisfy outstanding balances. Generally, unless a family member is a joint owner or guarantor of a deceased person’s debt, family members are not individually responsible for those debts. Debt collectors hope, however, that the majority of family members they contact will be ignorant about their obligations to the deceased’s creditors. In fact, a creditor’s ability to recoup funds to satisfy a deceased person’s debt is limited to those assets titled in the deceased person’s name at the time of death. If the deceased person died without assets, the debt collectors are out of luck and most likely cannot legally collect from next of kin. Family members would therefore be well-served to challenge any debt collectors looking to collect on a deceased person’s debts and demand written proof of another obligor on the account aside from the deceased. If the deceased died with assets, it is particularly advisable to consult with an attorney, preferably one well-versed in probate matters, to properly determine how a deceased’s debts should be handled.

To read more information about debt collectors targeting family member of the deceased, please visit this New York Times article: New York Times

Julie Pfitzenmaier

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This legislative update from the Society for Human Resource Management describes a new piece of federal legislation that was introduced yesterday. It has the potential to change dramatically the way in which unions organize and the rights employers currently maintain in requiring private elections to determine whether a workforce chooses to unionize.

Federal Legislative Action Alert!

Today, the Employee Free Choice Act was introduced in Congress! The bill was sponsored by Representative George Miller (D-CA), the House Education and Labor Committee Chair, and Senator Tom Harkin (D-MA).

The legislation would amend the National Labor Relations Act to allow unions to use the “card check” process – and bypass the secure, private election format – each time they attempt to organize workers.

Background

The National Labor Relations Act currently provides two opportunities for employees to decide whether or not to form or join a union:

1 Private ballot election - When a union receives a majority of votes through a secret ballot election administered by the National Labor Relations Board, the union is certified as the sole bargaining agent on behalf of the employees, or

2 “Card check” recognition - When a union receives at least 30 percent of signed authorization cards, the employer can request that a private ballot election be held. (When a union receives at least 50 percent of signed cards, the employer can either recognize the union immediately or request an election.)

Legislation

The EFCA would dramatically change federal labor law. The legislation would allow a union to bypass the election process after collecting authorization cards from a majority of employees. Thus, employers would lose the right to request that an election be held.

If enacted into law, EFCA would:

• Eliminate employees’ opportunity to vote in a federally-administered, private ballot election;
• Require binding arbitration within 120 days after a union is certified through a signed card collection process, if the employer and the union are unable to reach an agreement;
• Restrict an employer’s communications to employees about the workplace issues involved in the union organizing drive; and
• Create new fines against employers for an expanded list of unfair labor practices

SHRM supports the basic rights of all employees to decide freely whether or not to join a union. However, we strongly believe that a federally-supervised, private ballot election is the best way for employees to make this decision.

In addition, SHRM believes the mandatory binding arbitration called for under EFCA could impose unwanted employment conditions on both employees and employers. So in sum, employees could simultaneously lose their rights to vote on union representation and to approve workplace contracts.

Dirk A. Beamer

Michigan’s Unemployment Security Act was recently amended to extend unemployment benefits to certain employees who previously would not have been eligible.

Generally, individuals who leave work voluntarily are not eligible for unemployment benefits. The change to the Act creates an exception for an individual who is the spouse of a full-time member of the United States armed forces and who is forced to resign and relocate because of the military reassignment of the spouse.

Beginning after March 30, 2009, benefits paid to such individuals shall not be chargeable to the employer, but instead to the “nonchargeable benefits account” covered by the state.

Dirk A. Beamer

As previously discussed on this blog, part of the Economic Stimulus Package passed by Congress provides for a 65% government subsidy for eligible workers toward their COBRA coverage. On February 26, 2009, the IRS released new guidelines to help employers with the task of administering these benefits. The guidelines are Form IR 2009-15. You can find it on the IRS’s website at www.irs.gov. The website also contains a frequently asked questions update on this topic, as well as a revised Form 941, which is the form employers use to claim credit for COBRA medical premiums paid on behalf of former employees. A hard copy of the form will be sent to employers by the IRS later this month.

Employers seeking credit for the cost of the subsidy must maintain various forms of supporting documentation including the following:

• Information showing receipt of the former employee’s 35% portion of the premium;

• If you have a health insurance plan from a carrier, a copy of the invoice and proof of payment of the premium to the carrier;

• If your plan is self-insured, proof of the premium amount and proof of the coverage given to the terminated employee;

• A statement confirming that the covered employees were terminated involuntarily;

• Proof that the former employee claiming a subsidy was properly eligible for COBRA between September 1, 2008 through December 31, 2009;

• A record identifying all covered employees by social security number, the amount of subsidy reimbursed to each covered employee, and whether the subsidy was for one or more family member.

Dirk A. Beamer

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