COBRA Subsidies End August 31, 2011 - Should
You Notify Employees?
Connor A. Sabatino
Recovery and Reinvestment Act created a federal subsidy for COBRA premium
payments of eligible individuals who were involuntarily terminated from
employment. The subsidy, which reduced premium payments by 65 percent for up to
15 months, was available for individuals who qualified on or before May 31,
2010. On August 31, 2011, the last remaining eligible individuals will see
their 15 months run out and the subsidy end.
Any former employees who wish to maintain COBRA coverage
during any remaining COBRA continuation coverage period will now be responsible
for the full 100 percent of their premium payments. This shift in the landscape
is ripe for confusion. Plan administrators are not required to remind COBRA
enrollees of this change, nor are they required to bill enrollees for the
increased amount. Yet, not making full payments within the correct time period
can result in the cancellation of COBRA coverage. Taken together, there is a
strong potential for current COBRA enrollees, unaware of the subsidy
termination, to lose COBRA coverage if and when they continue to pay the
To avoid the complaints and confusion that could result
from a COBRA enrollee losing health care coverage, employers are advised to
discuss this subsidy termination with their group health insurance carrier or
the third-party administrator for their group health plan. Does the carrier or
administrator oversee any COBRA enrollees still utilizing the subsidy? Has the
carrier or administrator made an effort to notify these individuals of the
expiring subsidy? Simple actions, such as a courtesy notice to those COBRA
enrollees losing their subsidy, might foreclose future trouble with former
employees angry about lapsed coverage, not to mention other potential pitfalls,
such as public relations concerns.
To assist both employers and employees, the Department of
Labor has prepared a COBRA subsidy expiration Fact
Sheet, as well as a list of Frequently
IMAGE: Are You Ready to Join?
As the government continues to focus on strengthening the
tools it offers to help prevent the knowing hire of unauthorized workers,
employers who are serious about workplace compliance may consider joining the
U.S. Immigration and Customs Enforcement's (ICE) IMAGE Program. The program will not be right for all
employers, but it has some benefits discussed below.
IMAGE, which stands for ICE Mutual Agreement Between
Government and Employers, is actually a membership program that ICE created
in 2006 to prevent the knowing hire of unauthorized workers through the
promotion of ethical business conduct and self-governance by employers.
IMAGE takes compliance a step beyond the more well-known E-Verify Program, which is simply an Internet-based system
that compares information from an employee's I-9 Form to data from U.S.
Department of Homeland Security and Social Security Administration records.
IMAGE requires employers to use E-Verify, but they also
must submit to an I-9 inspection as part of the certification process and
commit to following the IMAGE Best Employment Practices. These include: using
Security Number Verification Service for wage reporting; making good-faith
efforts to verify the names and Social Security numbers of the current
workforce; establishing written hiring and employment eligibility verification
policies; creating an internal employment verification training program;
requiring that verification be conducted only by adequately trained
individuals; performing annual I-9 audits; establishing a procedure for
reporting potential criminal misconduct in the verification process; and
ensuring that any contractors and/or subcontractors also have employment
eligibility verification compliance procedures in place.
IMAGE participants are publicly recognized by ICE as
compliance role models when they join the program. Also, once the initial I-9
inspection is completed, employers are not subject to a subsequent inspection
for two years. In addition, fines may be mitigated or waived if violations are
discovered on fewer than 50 percent of the employer's I-9s, and employers also
are given time to resolve discrepancies discovered during the I-9 inspection.
While IMAGE may not be the right choice for every
employer, the growing use and acceptance of E-Verify, coupled with increased
I-9 inspections, make it a logical next step in the employment eligibility
verification compliance arena for employers who have a strong commitment to
highlighting the importance of immigration compliance in the workplace. Even
employers who do not join IMAGE would clearly benefit from instituting the
IMAGE Best Employment Practices. See this previous issue of the Legal News: Employment Law Update (Week Of March 15,
2010) for additional information on I-9 audits.
Labor and Employment Trivia
Following our regular weekly articles, we present a
trivia question with some historical perspective. It is hoped that our readers
will have some fun and learn a thing or two about the field in which we work.
The answer to each week's question will appear in the following week's update.
Send your comments or suggested trivia questions to Mark
Last week's question:
The Age Discrimination in Employment Act prohibits discrimination against
persons who are age 40 or older. Why was 40 picked as opposed to 21, 65, or any
Answer: Like everything else
in Congress, age 40 was the result of a legislative compromise. The following
explanation is taken from Bryan B. Woodruff, Unprotected Until Forty: The Limited
Scope of the Age Discrimination in Employment Act of 1967 73 Ind. L.J.
1295, 1297 (1998):
In 1967, the Secretary of Labor produced for Congress
specific legislative recommendations. These recommendations included protection
for individuals from 45 years of age to 65 years of age. The Senate and House
committees decreased the lower age limit from 45 to 40. The Congressmen
believed 40 was the age at which discrimination became evident. Also, they saw
that many states with similar legislation used 40 as their age limit. The
committees did consider an even lower age limit based on widespread
discrimination by airlines against stewardesses age 32 or older. Although the
committees recognized this discrimination, they "felt a further lowering
of the age limit proscribed by the bill would lessen the primary objective;
that is, the promotion of employment opportunities for older workers."
There were, however, several members of Congress who disagreed with this
week's question: (Suggested by a loyal subscriber) What pension
scheme operated by the federal government predated social security?