J&D Benefits Perspective

IRS Releases COBRA Subsidy Guidance

Jody Lee, Compliance Manager, Johnson & Dugan

The IRS released Notice 2009-27, which provides guidance in the form of 58 Questions and Answers with corresponding examples. Topics covered in the Notice include:

• The definition of "involuntary termination"
• Directions for calculating the premium reduction, including severance pay scenarios
• Explanation of what coverage is eligible for the subsidy
  
• Determination of the coverage periods.

The Notice provides welcome guidance in a number of areas. Employers should review the information to ensure that their COBRA Subsidy procedures are in compliance. Contact your Johnson & Dugan team for more information or assistance.

COBRA Subsidy - What Employers Can Do Now

Jody Lee, Compliance Manager, Johnson & Dugan

Employers are anxious to comply with the March 1, 2009 effective date of the COBRA Subsidy that was included in the American Recovery and Reinvestment Act signed by President Obama on February 17, 2009. The deadline for the Department of Labor (DOL) to publish the model notices is right around the corner, and employers as well as Assistance Eligible Individuals (AEI) patiently await the guidance these will notices offer. Although there are still many unanswered questions, some things are clear.

Specific deadlines have been set. Here is a timeline of important dates for employers and AEI's:

Date	Action
February 17, 2009	American Recovery and Reinvestment Act signed into law
March 1, 2009	COBRA Subsidy takes effect (pending model notice - subsidies may take effect retroactively)
March 19, 2009	Deadline for the DOL to publish model notices
April 18, 2009	Deadline for employers to provide notice to AEIs
Date of Notice + 60 days	Deadline for individuals to elect Second Chance COBRA per the special COBRA election period

Given the above dates, employers should prepare their compliance plan:

• Identify all terminations back to 9/1/08, including individuals involuntarily terminated. The Notice should go to all employees that lost coverage, although only those involuntarily terminated are eligible for the subsidy. Individuals will have the right to apply, and their request can be denied. A claim appeal process is included in the law.
• Once the model notices have been published, notifications must be distributed.
• Companies that outsource COBRA Administration should coordinate the identification and notification process with their vendor.
• Coordinate with payroll vendor to understand the mechanics of reporting and claiming the tax credit. (This will not apply to small employers subject to CalCOBRA rules.)

Johnson & Dugan will be providing clients with the model notices when they become available. We will also continue to distribute updates that clarify compliance rules when available. Contact your Johnson & Dugan team if you have any questions.

New Bills Will Greatly Affect Discrimination Claims, Health Benefits

President Barack Obama kicked off his first few weeks in office by signing a pair of bills that will significantly affect benefits compliance and discrimination lawsuits against employers.

Obama’s first significant bill, the Lilly Ledbetter Fair Pay Act of 2009, likely will make it easier for employees to sue employers for pay discrimination.

The bill overturns a 2007 Supreme Court ruling that stated that a worker, in order to meet the statute of limitations, had to file a discrimination claim within 180 days from the company’s initial decision to pay that worker less than another employee doing the same job.

The new law, however, removes any statute of limitations, meaning each paycheck can be a possible instance of discrimination.