Just as employers were starting to revise policies and understand the impact of significant changes to employment laws in 2008, they are faced with complicated changes recently enacted and already effective in 2009.
New COBRA Rules: The American Recovery and Reinvestment Act of 2009 (“ARRA”) was enacted to help workers maintain group health insurance coverage for themselves and their families after losing their jobs. AARA provides for 65% premium reductions and additional election opportunities for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). AARA requires employers to comply with strict notice requirements and to advance the subsidized payments for qualified individuals electing such coverage. ARRA then permits employers to obtain a reimbursement for the advanced funds via a credit on employment taxes. The subsidy (or premium reduction) applies to periods of health coverage beginning on or after February 17, 2009 and lasts for up to nine months. It is for those eligible for COBRA during the period beginning September 1, 2008, and ending December 31, 2009, due to an involuntary termination of employment that occurred during that period (referred to as “assistance eligible individuals”).
Plan administrators are required to provide notices of the subsidies to all employees and dependents covered by the group health plan (excluding flexible spending accounts) who have a COBRA-qualifying event during the periods from September 1, 2008, through December 31, 2009, regardless of the reason for the qualifying event and regardless of whether the individual previously declined COBRA or failed to make COBRA payments. The plan administrator then reviews the elections to determine whether the individual is an assistance eligible individual.
The Department of Labor (“DOL”) has posted model notice packages at www.dol.gov/ebsa. These packages include (1) a general explanation of COBRA rights as modified by the new subsidy rules, (2) a summary of the COBRA subsidy provisions, and (3) an application for the subsidy. There are three employer notices for different situations: (1) The General Notice is the typical initial notice containing all of the information required of a COBRA notice. (2) The Abbreviated General Notice is for those currently enrolled in COBRA, but who have not yet received notice of their additional rights under AARA, and thus, lacks COBRA election information. It may be sent in lieu of the full version to individuals who experienced a qualifying event on or after September 1, 2008, have already elected COBRA coverage, and still have it. (3) The Notice of Extended Election Period should be sent to any assistance eligible individual (or any individual who would be an assistance eligible individual if a COBRA continuation election were in effect) who: (a) Had a qualifying event at any time from September 1, 2008, through February 16, 2009; and (b) Either did not elect COBRA continuation coverage or who elected it but subsequently discontinued COBRA. The notice was due to be sent by April 18, 2009. If not sent by that date, it should be sent immediately.
Notices are available in English and Spanish. Employers need to modify these Model Notices to accurately reflect the employer’s particular plan. Issues the employer would want to reference include any prohibition against employees opting for a different employer-offered plan, a special notation limiting applicability for plans including domestic partners, and an explanation of the implications of any pre-existing employer subsidies. Employers must immediately revise or supplement their COBRA plan documents/ summary plan descriptions so that the notices and plans are consistent.
New CHIPRA Notice Requirements. The Children’s Health Insurance Program Reauthorization Act of 2009 (“CHIPRA”) requires group health plans to provide two new special enrollment rights beginning April 1, 2009. CHIPRA expands the list of events for opening enrollment to include an employee or dependent child (1) losing eligibility for coverage under Medicaid or a State Children’s Health Insurance Program (“CHIP”) or (2) becoming eligible for premium assistance from Medicaid or CHIP allowing the child to enroll in a group health plan. The group health plan must provide an expanded special enrollment period for such coverage and must notify employees now about the new CHIPRA rights.
New Hires Must Complete a Revised Form I—9: Employers are responsible for ensuring that all new hires complete the newly revised I-—9 Form (Rev. eff. 4/3/09). The revised Form may be found at http://www.uscis.gov. The revised Form eliminates certain documents from List A (Temporary Resident Card, and older versions of the Employment Authorization Card / Document), adds acceptable documents on the back of the form, and revises the employee attestation. The new rules also prohibit employers from accepting expired documents under either list. Employers not using the new I—9 form may be fined.
When performing your 2009 employment audit, be sure to include a review of the most significant 2008 changes as well:
409A Deferred Compensation Rules. Any agreement to compensate an employee in one calendar year for services provided in a different calendar year should be reviewed to ensure compliance with 409A in order to avoid significant penalties and taxes imposed on non-conforming arrangements as of December 31, 2008.
ADAAA: The ADA (Americans with Disabilities Act) Amendments Act of 2008 significantly expands the definition of disability, which broadens the number of employees and applicants entitled to the Act’s protections. Employers with at least 15 employees in the current or preceding year should seek the advice of counsel to understand the rights of employees and applicants with mental or physical impairments. The Amendments Act also expands “Regarded As” claims, which exist when an applicant or employee, who may or may not be disabled, claims that the employer discriminated against the individual because the employer regarded the individual as disabled.
Family and Medical Leave Act – Military Care: FMLA coverage was expanded to provide additional leaves relating to injuries sustained while on active military duty or for other exigent circumstances caused by active military service (not on active duty). The new law grants up to 26 weeks of leave in some circumstances and includes leave for family members caring for an injured service member. Employers with at least 50 employees should review their FMLA policies for compliance.