Transcript Slide 1

February 20, 2009
Times of Change
and
Your HR Responsibilities
Presenters
Chuck Campbell & Matt Dow
Jackson Walker L.L.P.
401 Congress Avenue, 14th Floor, Austin, TX 78701  512-473-4520
Overview:
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Why do we have the ADA?
What did the ADA originally say?
How was the ADA interpreted?
What caused the ADA to be changed?
How has the ADA been changed?
What difference will this make to you?
Who Is Covered Under the ADA?
• ADA prohibits discrimination against any
qualified individual with a disability and requires
employers to provide reasonable
accommodations to enable such individuals to
perform the essential functions of their job
• It is not always apparent which employees or
prospective employees are “disabled.”
Who Is Covered Under the ADA?
• At the outset, it was obvious that a person
walking into your office with a cane and dark
glasses or arriving in your office in a wheelchair
was “disabled.”
• But the drafters of the ADA had larger ambitions
and wanted to include more people within the
category of “disabled” individuals.
• So they set about defining “disability” more
broadly.
Who Is Covered Under the ADA?
• But they also had to recognize that employers
should not be obligated to hire a person with a
disability who was not qualified to work.
• This led to the concept of the “qualified
individual with a disability.”
Who Is Covered Under the ADA?
• The ADA accordingly prohibited discrimination
against any qualified person who
• had a disability and who,
• with or without reasonable accommodation,
• could perform the essential functions of the job
in question.
ADA: The Early Experience
• At the beginning of the ADA’s application to the workplace,
the anticipated claims were made
• blind individuals denied an opportunity to perform tasks for
which they were qualified;
• wheelchair bound individuals claimed they could operate a
computer if the keyboard and the screen were modified to
permit them to have access to it;
• diabetics claimed their frequent need to take medication
required that they be accommodated with additional
absences.
ADA: The Early Experience
• Unfortunately, there were also the “other claims,” such
as
• worker who went on a violent rampage in the
workplace and then claimed his termination was a
violation of the ADA because he had a psychological
impairment at the time and was otherwise qualified to
do his job, or
• truck driver who claimed he was not hired in violation
of the ADA because his vision was too poor to see the
roadway but who claimed that he could and should
have been accommodated.
Death Knell for the Original ADA:
Sutton v. United Air Lines
• The struggles the courts had with claims like
these reached its apex in 1999, when a trio of
cases came before the U.S. Supreme Court.
• The most prominent of these was Sutton v.
United Air Lines.
Death Knell for the Original ADA:
Sutton v. United Air Lines
• In the Sutton case, two women sued United Air
Lines because they were excluded from its pilot
training program.
• They were twin sisters who had severe myopia.
Without corrective lenses, they could not see to
conduct numerous daily activities; with
corrective measures, both allegedly were able to
function identically to individuals without
similar impairments.
Death Knell for the Original ADA:
Sutton v. United Air Lines
• They applied to be commercial airline pilots, but were
told by United Air Lines they could not qualify
because it had a requirement that pilots have
uncorrected vision of 20/100 or better.
• Their uncorrected vision was 20/600.
• They then sued under the ADA, claiming that their
severe myopia was a “substantially limiting”
impairment, entitling them to be classified as
“disabled.”
Death Knell for the Original ADA:
Sutton v. United Air Lines
• The Supreme Court rejected their claim.
• “Looking at the Act as a whole, it is apparent that if
a person is taking measures to correct for, or
mitigate, a physical or mental impairment, the
effects of those measures––both positive and
negative––must be taken into account when
judging whether that person is ‘substantially
limited’ in a major life activity and thus ‘disabled’
under the Act.”
Death Knell for the Original ADA:
Sutton v. United Air Lines
• The Court concluded that a person could only
be “disabled” within the meaning of the ADA if
the person was presently—as opposed to
potentially or hypothetically—substantially
limited in a major life activity. Thus, if an
impairment could be corrected by mitigating
measures, the Court held that the impairment
did not “substantially limit” a major life activity
Sutton v. United Air Lines
• The dissent pointed out that the impact of the
ruling by the Court would be to exclude a
person with an artificial limb from being
“disabled” because the artificial limb was a
“corrective device” enabling the individual to
enjoy most of life’s major activities.
ADAAA Findings & Purpose
• Sutton took away ADA protection for people who
should have it;
• Supreme Court held that “mitigating measures” such
as insulin to control diabetes must be considered in
determining whether an impairment qualifies as a
disability;
• ADAAA prohibits ameliorative effects of mitigating
measures
• Reinstate broad scope of protection Congress intended
under ADA
The Amendments –
Definition of Disability
• A physical or mental impairment that substantially
limits one or more major life functions
• Greatly expands the scope of employees covered by
changing the interpretations of terms
• Definition of disability must be broadly construed
• Whether an individual’s impairment is a disability
under the ADA should not demand extensive analysis
• What does “substantially limits” mean?
The Amendments –
Definition of Disability (cont’d)
• Major Life Activities
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performing manual tasks
learning
concentrating
thinking
communicating
walking
seeing
breathing
The Amendments –
Definition of Disability (cont’d)
• A Major Life Activity now includes Major Bodily
Functions:
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“[F]unctions of the immune system”
Digestive functions
Bladder functions
Respiratory functions
Reproductive functions
The Amendments –
Definition of Disability (cont’d)
• Before employees only covered if employer regarded
employee as having an impairment and regarded that
impairment to substantially limit a major life activity
• Now, employee only has to prove employer regarded
them as having an impairment
• Thus – regarded as having “such an impairment” really
means regarded as having an impairment.
• Episodic impairments and those in remission may be
disabilities
The Amendments –
Definition of Disability (cont’d)
• ADAAA expressly rejects consideration of the
effects of mitigating measures
• Mitigating measures include medication, medical
supplies, low vision devices (other than eye
glasses or contact lens), prosthetic limbs and
devices, hearing aids, mobility devices, oxygen
therapy equipment, reasonable accommodations or
auxiliary aids and services, or learned behavioral or
adaptive neurological modifications
Reasonable Accommodation Law
Unchanged
• The ADA provides a right to reasonable
accommodation, not to the employee’s
preferred accommodation. Hedrick v. Western
Reserve Care System, 355 F.3d 444, 457 (6th Cir.
2004).
• EEOC Appendix A to regulations: “[T]he
employer providing the accommodation has the
ultimate discretion to choose between effective
accommodations...”
Reasonable Accommodation Law
Unchanged
• Employee must notify employer that adjustment
or change is necessary
• Request can take many forms and employee not
required to specifically mention the “ADA” or
“reasonable accommodation”
• Interactive process!
Is There Any Good News?
• Reasonable accommodation unchanged
• Carved out exception for eye glasses and
contacts as mitigating measures
• “Regarded as” does not cover minor or
transitory impairments – those lasting 6 months
or less (or expected to last 6 months or less)
• Reverse discrimination claims prohibited
• Still must be “qualified” to perform essential
functions
Going Forward
• Don’t assume no coverage unless truly minor
condition that will not last 6 months;
• Tighten up job descriptions paying special
attention to essential functions;
• Train supervisors on new definitions to avoid
“regarded as” claims;
• Carefully document valid, non-disability related
reasons for any job action.
Going Forward
• Focus of litigation will now be on whether
employer failed to reasonably accommodate,
not on whether employee was actually disabled;
• Must perform and document reasonable
accommodation process-interactive;
• Draft reasonable accommodation policy that
tracts EEOC regulations;
• Prepare to grant more requests for
accommodation than in past.
NEW FMLA REGULATIONS
• Includes overhaul of original regulations-does
differ from proposed regulations
• Adds new regulations addressing the National
Defense Authorization Act of 2008, which
amended the FMLA to provide for Military
Family Leave
MEDICAL CERTIFICATION PROCESS –
TIMING
• Employers may request medical certification up to five
days after the employee has either given notice of need
for leave or, in the case of unforeseen leave, the date the
employee begins leave.
• Employer may also require a new medical certification
each leave year for conditions that last longer than a
year.
• Employer may request a recertification every six months
if the leave involves an on-going “serious medical
condition.”
MEDICAL CERTIFICATION PROCESS –
CONTENT
• If employer determines medical certification is
incomplete or insufficient, required that the employer
inform the employee of the deficiencies in writing and
provide seven calendar days to cure the deficiency.
• An employer can contact the employee’s healthcare
provider for clarification of information contained in
medical certification.
• Employer’s representative must be a healthcare
provider, human resources professional, leave
administrator, or a management official but never direct
supervisor.
FITNESS-FOR-DUTY CERTIFICATIONS
• Employer may require that a fitness-for-duty
certification specifically address the employee’s ability
to perform the essential functions of the job.
• If employer has reasonable safety concerns, may
require an employee on intermittent leave to provide a
fitness-for-duty certification before returning to work.
EMPLOYER NOTICE OBLIGATIONS
• Employers must post a general FMLA notice in
the workplace and include the notice in the
company’s employee handbook (use DOL form)
• Electronic posting
• Employers must provide a personalized
eligibility notice when an employee requests
FMLA leave or the employer has knowledge that
leave may be FMLA qualified (use DOL form)
EMPLOYER NOTICE OBLIGATIONS
• Employers must issue a “rights and responsibilities”
notice detailing the employee’s obligations to provide a
medical certification, the right to substitute paid leave,
etc. (use DOL form)
• Require employers to issue a designation notice within
five days after receiving sufficient information to
determine that leave will be covered, notifying the
employee that the leave has been designated as FMLA
leave.
• Increased liability for failure to provide timely notice.
EMPLOYEE NOTICE REQUIREMENTS
• Employee must follow the employer’s normal
and customary call-in procedures, unless there
are unusual circumstances
• New regulation modifies requirement that
employees notify their employers of need for
FMLA leave up to two days after an absence;
follow employer policy
SERIOUS HEALTH CONDITION
• New regulations do not change the six individual
definitions of a serious health condition
• The two visits to a healthcare provider must
occur within thirty days of the incapacity
• First visit must occur within seven days of the
start of the incapacity
• “Periodic visits to a healthcare provider” require
at least two visits to a healthcare provider per
year
DISPUTE RESOLUTION
• If a dispute arises between an employer and an
employee as to whether leave qualifies as FMLA
leave, it should be resolved through
discussions between employee and employer.
• The discussions and decision must be
documented.
WAIVER OF RIGHTS
• Employees may now voluntarily settle their
FMLA claims without court or DOL approval
• Prospective waivers of FMLA rights are
prohibited
• Employers should modify releases to include
waiver of FMLA claims
WHAT SHOULD EMPLOYERS DO?
• Update policies and procedures to include new
regulations
• Train supervisors to be aware of changes
• Improve communications with employees
• Discuss and document FMLA disputes
• Use DOL forms
MILITARY-RELATED FMLA LEAVE
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Two new types of Military Family Leave created
Military care giver leave
Qualifying exigency leave
Unless otherwise noted, normal FMLA
procedures apply
General Provisions
• Twelve weeks of FMLA leave available while
employee’s spouse, son, daughter, or parent is
on active duty or call to active duty for
qualifying exigencies
Defining “Active Duty”
• Exigency leave applies only to members of the Reserve
and National Guard, and certain retired members of the
Regular Armed Forces and Retired Reserve.
• Excludes active members of the Regular Armed
Forces.
• Applies only to a Federal call to active duty of a
National Guard or Reserve member. A State call to
active duty of National Guard or state militia is not
included within this section unless under order of the
President.
Qualifying Exigencies
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Short-notice Deployment
Military Events and Related Activities
Childcare and School Activities
Financial and Legal Arrangements
Rest and Recuperation
Post-Deployment Activities
Counseling
Additional Activities
Short-Notice Deployment
• Applies when a covered military member is
notified of an impending call to active duty in
support of a “Contingency operation” 7 or less
days from date of deployment
• Provides 7 days of leave from the date military
member is notified of call of duty
Military Events and Related Activities
• Leave is permitted to attend an official ceremony,
program, or event sponsored by the military that is
related to active duty or call to active duty, and
• To attend family support or assistance programs and
informational briefings sponsored or promoted by the
military, military service organization, or American Red
Cross that are related to active duty or call to active
duty
Childcare and School Activities
• Allows leave to be taken for a child who is either
under 18 or 18 or older and incapable of selfcare because of a mental or physical disability
in order to:
• Arrange for alternative childcare
• Provide childcare on an urgent, immediate need basis
• Enroll the child or transfer the child to a new school or
daycare facility
• Attend meetings with staff at school or daycare facility
Financial and Legal Arrangements
• To make or update financial or legal arrangements to
address the covered military member’s absence while
on active duty or call to active duty status, and
• To act as the covered military member’s representative
before a federal, state, or local agency to obtain,
arrange, or appeal military service benefits while the
member is on active duty or call to active duty status,
and for 90 days following termination of active duty
status.
Rest and Recuperation
• Allows up to 5 days leave to spend time with a
military member who is on short-term,
temporary rest and recuperation leave during
the period of deployment.
Post-Deployment Activities
• Allows leave to attend arrival ceremonies, reintegration
briefings and events, and any other official ceremony
or program sponsored by the military for 90 days
following termination of covered member’s active duty
(not literal 90 days but until the end of the Dep’t of
Defense “Yellow Ribbon Reintegration Program”)
• And allows leave to address issues that arise from the
death of a member while on active duty
Counseling
• Allows leave to attend counseling provided by
someone other than a health care provider (because
otherwise covered under traditional FMLA) for oneself,
the military member, or child under 18 (or 18 or over
and incapable of self-care because of mental or
physical disability).
• Need for counseling must arise from the active duty or
call to active duty status of covered military member.
Additional Activities
• Allows leave to address other events which
arise out of covered military member’s active
duty or call to active duty status.
• Employer and employee must agree that such
leave will qualify as an exigency, and agree to
both the timing and duration of the leave.
Certification
Requirements for
Qualifying Exigency
Active Duty Orders
• The first time an employee requests leave because of a
qualifying exigency, may require copy of active duty
orders or other military-issued documentation
indicating active duty status and the dates of the active
duty service.
• This information need only be provided once.
• May require a copy of new active duty orders if the
need for leave arises out of a different active duty of
the same or different covered military member.
Other Required Information
• An employer may require that additional
information regarding the exigency be
supported by a certification from the employee.
• Form WH-384:
http://www.dol.gov/esa/whd/forms/WH-384.pdf
• No information may be required beyond that
specified in this section of the regulations or on
the form.
Military Caregiver
Leave
General Provisions
• Allows an eligible employee who is the spouse, son,
daughter, parent or next of kin to a covered service
member to take 26 workweeks of leave during a single
12 month period to care for the service member who is
on the temporary disability retired list, who has a
serious injury or illness incurred in the line of duty on
active duty for which he or she is undergoing medical
treatment, recuperation, or therapy; or otherwise in
outpatient status or in the temporary disability retired
list
“Covered Service Member”
• Includes members of the Regular Armed Forces,
current members of the National Guard or
Reserves, and members of the Regular Armed
Forces, the National Guard and Reserves who
are on temporary disability retired list.
“Next of Kin”
• A servicemember’s nearest blood relative other than
the covered servicemember’s spouse, parent, son, or
daughter, in the following order of priority:
• Blood relatives who have been granted legal custody of the service
member by court decree or statutory provisions
• Brothers and sisters
• Aunts and uncles
• First cousins
• Exception: if a servicemember has written designation otherwise
“Serious Injury or Illness”
• An injury or illness incurred by a covered
servicemember in the line of duty on active duty
that may render the servicemember medically
unfit to perform the duties of his or her office,
grade, rank, or rating.
“Single 12 month period”
• An eligible employee may take no more than 26 workweeks of
leave during any single 12 month period.
• The 26-workweek entitlement is to be applied as a perservicemember, per-injury entitlement, meaning that an eligible
employee may take 26 workweeks of leave to care for one
covered servicemember in a single 12-month period, and then
take another 26 workweeks of leave in a different 12-month
period to care for another covered servicemember or to care for
the same covered servicemember with a subsequent serious
injury or illness
• The “single 12-month period” begins on the first day the eligible
employee take military caregiver leave, and ends 12 months
after that date
Forfeiture of Leave
• If an employee does not use his entire entitlement
during the single 12-month period, the remaining
workweeks of leave are forfeited.
• However, an employee may be eligible to take
additional periods of 26 workweeks of leave in
subsequent “single 12-month periods” if the leave is to
care for a different covered servicemember of to care
for the same servicemember with a subsequent serious
injury or illness
Certification
Requirements for
Military Caregiver
Leave
Certification from Health Care Provider
• An employer may require an employee to obtain
certification completed by an authorized health
care provider of the servicemember when leave
is taken to care for a servicemember with a
serious injury or illness.
• Prototype is WH-385:
http://www.dol.gov/esa/whd/forms/WH-385.pdf
Fiduciary Concerns and Your 401(k) Plan
I.
II.
III.
IV.
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VI.
Fiduciary Overview
Plan Administrative Structure
Participant Directed Investments
Concerns with Current Market
Conditions
Common Administrative Errors
Qualified Plan Developments
Why Are You a Fiduciary?
• You have authority and responsibility for the
administration and management, including the
investment of assets, of a trust for the benefit of
employees, retirees, and beneficiaries.
• You are personally liable if you are a fiduciary.
What are your duties?
• Act with prudence
• Ordinary person vs. prudent investor
• Act solely in interest of participants and
beneficiaries
• No self-dealing
• Incur only appropriate and reasonable costs and
expenses
• Diversify assets
• Follow Plan Documents
Prudence (n):
• Careful management
• Avoidance of possible hazards
• Knowing how to avoid embarrassment
Prudence does not require perfection!
• It requires carefulness, discretion, and
consistency.
• Prudence is about following a sound process
in making a decisions.
• Prudence does not require always making the
“right” decision. It is how you make the
decision.
Best Practices for Prudence
1. Establish and follow a process
2. Obtain necessary education
3. Monitor your decisions
4. Document all of the above
Establishing a process – for what?
• For most statutorily-required actions
• For actions and behavior implicating fiduciary
duties
• For administration and management decisions
affecting participants
• Any other aspect of your plan that may provide
a “possible hazard” or cause “embarassment”
• Example: Investment Policy; Loan procedures
Establishing a process – in what form?
• Written processes and procedures are usually
appropriate.
• These may be incorporated into plan document,
administrative rules, or board governance
documents.
• If you put it in writing, you better follow it!
Education
• Prudence requires:
• Understanding your duties and
responsibilities.
• Obtaining information necessary to make
informed decisions in carrying out these
duties and responsibilities.
Education (cont.)
Duties and Responsibilities
• Know your plan document.
• Know your governing documents.
• Know your fiduciary duties.
• Know your applicable Codes of Conduct.
Education (cont.)
Information to Make Informed Decisions
General
• General investment theory and practices.
• Benefit structures and plan funding issues.
Specific
• Selection of outside consultants and
providers.
Education (cont.)
How can I Learn What I Need to Know?
• Review plan documents and board governing
documents and ask questions.
• Fiduciary Education Seminars and Conferences
• Consultants (attorneys, TPAs, investment
consultants)
• For specific decisions, you may need to acquire
specific information.
Monitoring
• Prudence requires monitoring of your
decisions.
• You must ensure that the intended outcomes
and results of your decisions are achieved.
• Mistakes may be forgiven, but failing to
correct such mistakes will not.
• Some ongoing responsibilities are monitoring
in and of themselves.
Monitoring (cont.)
Monitoring
• Build it into the process
• Require periodic review of decisions.
• Frequency of such review depends on the
nature of the decision.
• If your duties are on-going or multi-step, set
forth when and how the follow-up decisions
are made.
• Monitor your processes as well.
Document
• Keep a written record!
• It is Exhibit A of your defense
Document – how??
• Establish written procedures and keep them current
• Keep minutes of all Board or Committee meetings in
which processes are implemented and decisions made
• Collect all material used to make decisions
• Keep a record of conference and seminars attended
with materials and agendas
Protecting Yourself as
a 401(k) Plan Fiduciary
II.
Plan Administrative Structure
• Who is your “plan administrator”?
• Who is your “named fiduciary”?
• Consider a “Benefits Administrative
Committee.”
• Check your insurance policies.
Protecting Yourself as
a 401(k) Plan Fiduciary
III.
Investment Policy
• Do you have one? Is it updated?
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Does it include a process for selecting
and monitoring investments?
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How do you analyze fee structures?
Protecting Yourself as
a 401(k) Plan Fiduciary
IV.
Participant-Directed Investments
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404(c) Protection—do you have it?
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What about when participants do not make elections?
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QDIA – Qualified Default Investment Option
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Safe Harbor if participant fails to make an election
as to investments
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What if a participant’s election is no longer valid due to
change in investment offerings?
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QCIO – Qualified Change in Investment Option
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Safe Harbor for “mapping” investments during
fund change or plan merger
Protecting Yourself as
a 401(k) Plan Fiduciary
IV. Concerns with Current Market Conditions
• Be careful with “blackout” periods in
plan or fund conversions
• Be prepared for heightened participant
“interest.”
• Be mindful of employer stock fund
concerns.
• Follow investment policy and
procedures---do not panic!!
Protecting Yourself as
a 401(k) Plan Fiduciary
V.
Common Administrative Errors
A. Improper Exclusion of Eligible Employees
• How? When?
• Change in employment status or age
• Fail to provide enrollment
• Miscalculation of service
• Mergers & Acquisitions
• Problem:
• Missed opportunity for deferrals and employer
contribution
• Plan operational defect
• Fix:
• EPCRS (self-correction or VCP)
Protecting Yourself as
a 401(k) Plan Fiduciary
B. Definition of Compensation
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How? When?
• Include items of compensation that are excluded under the
Plan
• Exclude items of compensation that are included under the
Plan
• Payroll classification error
• Mergers & acquisitions
Problem:
• Over or under funding of deferrals and contributions
• Compensation limit implications
Fix:
• EPCRS (self-correction or VCP)
Protecting Yourself as
a 401(k) Plan Fiduciary
C. Failure to Timely Transfer Elective Deferrals as soon as
Administratively Practical
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How? When?
• Mistaken belief that the 15th day of following month is a
safe harbor for transfer—it’s not! Transfer must be as
soon as administratively practicable.
• Payroll errors
• Cash flow considerations
Problem:
• Amounts become “plan assets” in hands of employer
• Prohibited Transaction under Code and ERISA
• # 1 issue on DOL audit
Fix:
• Restore amounts to plan plus interest/earnings
• Pay excise tax and file return (Form 5330)
Economic
Stimulus Package
and COBRA
Economic Stimulus
Package and COBRA
• Signed by President Obama on Tuesday,
February 17, 2009
• Includes several important provisions that
affect COBRA continuation coverage and that
place new requirements on employers.
• Most notably, certain COBRA beneficiaries may
be eligible for a 65% discount on their
premiums for a limited period of time.
Who is eligible?
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“Assistance Eligible Individual”
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Must have been involuntarily terminated from
employment during the period from
September 1, 2008 to December 31, 2009.
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Certain maximum income levels ($125k-$145
individ. ;$250-$290 joint) at which an
individual is no longer eligible for the subsidy
or is eligible for a reduced subsidy.
What is the subsidy?
• 65% reduction in COBRA premium for a period
not to exceed 9 months
• Can terminate earlier if either of the following
occurs:
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the individual is eligible for Medicare
benefits or coverage under another group
health plan (flexible spending accounts,
dental and vision coverage and other
certain benefits are excluded); or
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the maximum period of continuation
coverage required under COBRA expires.
Notice Requirement for
Beneficiary Receiving Subsidy
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If an assistance eligible individual who is receiving
the subsidy subsequently becomes eligible for
coverage under another group health plan or
Medicare, he or she must notify in writing the group
health plan providing the COBRA coverage.
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If the beneficiary fails to provide the notification and
continues to receive the subsidy, the individual will
be subject to a tax penalty equal to 110% of the
subsidy received after ineligibility.
New Special COBRA Election period
• For those individuals who are eligible for the
subsidy but who did not originally elect
COBRA coverage, or who did elect COBRA
coverage and subsequently terminated it, the
Act provides for a new 60 day election period,
beginning on the date that notice is provided
to the assistance eligible individual.
• Employers must notify these assistance
eligible individuals of the special election
period within 60 days of the enactment of the
Act.
New Special COBRA Election period
• This 60 day election period will not extend the
period of COBRA continuation coverage
beyond the original maximum period required
by COBRA.
• Once an individual elects coverage, the
coverage begins on or after the date of
enactment of the Act and does not include any
prior period
What plans are subject to subsidy?
• Subsidy applies not only to coverage required
to be offered under the COBRA rules but also
to similar continuation coverage required
under State law for group health plans not
subject to COBRA and to Federal or State
government-maintained health plans.
• Health flexible spending accounts are not
eligible for the subsidy
COBRA Notices
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The usual COBRA notice provided to qualified
beneficiaries must now include forms to
establish eligibility for the subsidy as well as
information about the beneficiary’s right and
conditions of the subsidy.
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Employers must also provide notice to those
individuals who qualify for the special 60 day
election period.
COBRA Notices
• Employers whose group health plans are not
subject to the COBRA continuation coverage
requirements but still qualify for the subsidy
must provide notice to the assistance eligible
individuals.
• The Act directs the Secretary of Labor to
provide model notices within 30 days of
enactment of the Act
Who provides subsidy? Employers
• Employers are required to provide subsidized
COBRA coverage and will be reimbursed for
the remaining 65% of the premium by treating
such amounts as a credit against their liability
to the Federal government for payroll taxes.
• If the reimbursable amount exceeds an
employer’s liability for payroll taxes, then
Treasury will reimburse the employer directly.
Employers subject to reimbursement must file
reports required by the Secretary of Treasury.
Circular 230
The statements contained herein are not intended
to and do not constitute an opinion as to any tax
or other matter. They are not intended or written
to be used, and may not be relied upon, by you or
any other person for the purpose of avoiding
penalties that may be imposed under any Federal
tax law or otherwise
Matt Dow
Charles (Chuck) H. Campbell, Jr.
Jackson Walker L.L.P.
Austin
100 Congress Avenue, Suite 1100
Austin, Texas 78701
[email protected]
[email protected]