Employers Are Responsible to Notify Employees of COBRA Subsidy Law Changes

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Employers must communicate with employees and recently terminated employees about the eligibility changes in the COBRA subsidy law, as mandated by the Temporary Extension Act of 2010. The subsidy law pays 65% of COBRA or state continuation health insurance premiums for employees who were involuntarily terminated between September 1, 2008 and February 28, 2010. The Extension Act moved that end date to March 31, 2010; but the U.S. Congress may extend it to December 31, 2010, with new legislation.

The subsidy also applies to employees whose hours were reduced between September 1, 2008 and March 31, 2010, and then were terminated involuntarily between March 2, 2010 and March 31, 2010. Eligibility for employees in this category is slightly different; in that their continuation of health insurance coverage through COBRA (and with the subsidy) begins on the day their hours were reduced, not the day of termination. These employees must be sent special notices within 60 days of the date of involuntary termination.

Another small, but important, detail of the Act is that employers are required to notify all employees terminated during the eligibility dates, regardless of whether employees agree with the voluntary or involuntary designation. Employees who disagree with that determination may request the U.S. Department of Labor to decide if the termination was voluntary or involuntary.

All employers will want to revise their HR procedures: COBRA notices should be updated with the time extension. Tracking systems should be modified to record accurately any changes for eligible former employees. Third-party COBRA administrators should be contacted to coordinate procedural and data revisions. The best source of information for employers is the U.S. Department of Labor Web site: dol.gov.

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