COBRA

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These executive summaries were compiled from EMPLOYEE BENEFITS INFOSOURCE database, a source for information on employee benefits and human resources.

Other Recent Decisions.
Benefits Magazine; v49 no4 pp 68-70 Apr 2012; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Contested withdrawal liability prompted the case of Plan Board of Sunkist Retirement Plan v. Harding & Leggett Inc. The defendant company argued the basis for the liability calculation was erroneous in three ways. The Ninth Circuit Court of Appeals found one point based on a clerical error but otherwise affirmed the plaintiff's assessment of withdrawal liability. In Trustees of the U.A. Local 125 Health and Welfare Plan et al. v. A'Hearn Plumbing & Heating Inc. et al. the District Court for the Northern District of Iowa refused to grant a company's motion for summary judgment, finding disputed issues of material fact that cloud the company's relationship with the primary defendant company. In International Union, United Automobile, Aerospace, and Agricultural Implement Works of America et al. v. Kelsey-Hayes Co. et al., the Eastern Michigan District Court ruled the plaintiff retirees, seeking determination of lifetime health benefits, were bound by a plant closing agreement that terminated the collective bargaining agreement. Whether the plant closing agreement applies to retirees must be decided through arbitration. In Boddicker v. Esurance Insurance Services Inc., the District of South Dakota awarded the plaintiff a statutory penalty of $22,700 after finding the defendant failed to send COBRA notice to the plaintiff. In Smith v. Stockwell Construction Co. Inc. et al., the plaintiff was the ex-wife of a profit sharing plan participant and the designated beneficiary. Upon the participant's death, the plan awarded benefits to the participant's father. The District Court for Western New York permitted the plaintiff's claim about producing plan documents and notifying her of her rights to move forward, while dismissing the defendants' motion to dismiss.
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Other Recent Decisions.
Benefits Magazine; v49 no3 pp 66-68 Mar 2012; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In Janese et al. v. Fay et al., the U.S. District Court for the Western District of New York maintained its previous dismissal of the plaintiffs' claims was appropriately time barred. It rejected their contention that the activities leading to the suit were part of an ongoing single scheme that benefited older participants and found no new evidence or change to overcome the statute of limitations. In Blaikie v. RSight Inc. et al., the District Court for the Middle District of Florida granted summary judgment for the defendant, which terminated the plaintiff's COBRA coverage for nonpayment. The court found the plaintiff failed to exhaust administrative remedies and was not entitled to claim equitable estoppel and that her legal actions exceeded the statute of limitations. In Strobel v. Dillon et al., the Eastern Michigan District Court dismissed the claim of the plaintiff, a state inmate whose incarceration costs were to be deducted from his monthly pension benefit. The court ruled it did not have jurisdiction over the plaintiff's claim of alienation of benefits but concluded the action was barred by res judicata, since the issue has been addressed by the Michigan Supreme Court and the Sixth Circuit.
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USERRA: Protecting Employees Who Protect Our Country.
LeTourneau, Janet; Broker World; v32 no2 pp 44, 46, 48 Feb 2012; journal article

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Abstract : The Uniformed Services Employment and Reemployment Act of 1994 (USERRA) protects the job and benefits of those on military leave. The law protects full-time workers, applies to all employers, regardless of size, and requires notification to the employer. Public employers must continue paying the employee during military leave. USERRA provides for continuation of health coverage under COBRA for up to 18 months, with the employee paying ahead, during leave or upon return. Upon return, the employee must request his or her job back within a specific time and must be reinstated to health benefits without limits, other than possible exclusion of conditions incurred during service. Section 125 Cafeteria plan benefits must be coordinated with CHAMPUS.
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Health Care: W-2 Reporting Requirement Highlights Emerging Challenges of COBRA Compliance.
Olsen, Florence; Daily Labor Report; no14 p A3 Jan 23, 2012; journal article

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Abstract : Guidance from the IRS reminds employers that all costs of health plan benefits must be accounted for on employees' W-2 forms. This includes costs for employee assistance plans, wellness programs and onsite health clinics that feature medical services. Employers who continue to offer these services after an individual's employment ends must include their cost in COBRA premiums. As of early 2012, the IRS has yet to develop regulations to cover such situations. The need for COBRA may diminish when individuals can purchase nongroup coverage on the open market through state health exchanges, rather than staying with a previous employer.
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Interim Guidance on Informational Reporting to Employees of the Cost of Their Group Health Insurance Coverage: Notice 2012-9.
Internal Revenue Bulletin; no2012-4 pp 315-325 Jan 23, 2012; journal article

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Abstract : The IRS has clarified through Notice 2012-9 how employers must report the cost of health benefits to employees to comply with the Patient Protection and Affordable Care Act. The guidance changes several points from the earlier Notice 2011-28 including application to tribally chartered organizations, interim relief for employers filing less than 250 W-2 Forms, application for related employers not using a common paymaster and reporting dental and vision plan costs. Changes are also made to guidance pertaining to employee contributions to health flexible spending arrangements, two percent shareholder employees of S corporations and COBRA premiums using a composite rate. Additional guidance is provided on several points including COBRA costs for extended health benefits, costs for nonrequired benefits and prorated cost calculations.
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How Conflicting Same-Sex Union Laws Are Impacting Employee Benefits.
Solomon, Todd A.; Adams, Joseph S.; Johnson, Brett R.; Benefits Magazine; v49 no1 pp 14-21 Jan 2012; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Employers' freedom to offer employee benefits is somewhat constrained by state and federal laws, especially in the area of same-sex partnerships. The federal Defense of Marriage Act (DOMA) rejects same-sex marriage in all cases, and over 40 states have mini-DOMAs, while a growing number of states have recognized or legalized same-sex partnerships. Employers must consider each benefit type and the legal status of same-sex unions where their employees live, work and were married. Employers may provide retirement and health benefits to same-sex partners, though benefits may be taxable. The same applies to COBRA and federal family and medical leave, though voluntary benefits are not affected by DOMA and mini-DOMAs. The rapid pace of change demands that employers monitor state and federal developments.
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Educating Former Employees on Post-COBRA Subsidy Health Insurance Options.
Matalluci, Gary; Daily Labor Report; no227 p I1 Nov 25, 2011; journal article

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Abstract : The federal subsidy for COBRA ended in August 2011, leaving many former employees looking for alternatives for health insurance which will be at substantially higher costs. HR can help former employees move to another insurance arrangement, providing education about options and directing them to additional resources. Alternatives to consider include preexisting condition insurance plans under the Patient Protection and Affordable Care Act, individually purchased plans and guaranteed issue plans for dependents under age 18. Coverage through a working spouse's plan, short-term health insurance and government sponsored options may also be available. HR should be sure former employees know their rights through the Health Insurance Portability and Accountability Act when they maintain creditable coverage without a significant gap.
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Educating Former Employees on Post-COBRA Subsidy Health Insurance Options.
Matalluci, Gary; BNA's Pension & Benefits Reporter; v38 p 1842 Oct 4, 2011; journal article

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Abstract : August 2011 was the end of federal COBRA subsidies, leaving many former employees unsure where to get health coverage. Human resource personnel have a final opportunity to educate their former employees as they seek health insurance. COBRA may be a less attractive option for many than preexisting condition insurance plans, individual health plans or guaranteed issue plans for minor dependents. Other alternatives to consider are joining a spouse's plan, short-term health insurance, guaranteed issue plans under the Health Insurance Portability & Accountability Act of 1996 and state sponsored high-risk insurance pools.
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Steps Employers Should Take to Ensure Employee Benefit Plans Comply With New York's Law on Same-Sex Marriages.
Lewkowicz, Thaddeus J.; Employee Benefit Plan Review; v66 no4 pp 12-14 Oct 2011; journal article

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Abstract : New York's Marriage Equality Act took effect when signed on July 24, 2011, extending legal protections and rights to married couples regardless of gender, with exceptions for religious organizations. Retirement plans subject to the Internal Revenue Code and ERISA offering spousal survivor annuities are not required to extend same sex protections under the state law due to the Federal Defense of Marriage Act, nor are benefits based on federal law, such as COBRA. Self-insured health plans may but are not required to extend comparable benefits to same sex spouses, but some self-insured governmental and church plans, other than religious organization plans, are not preempted by ERISA and must comply. Benefits are subject to federal taxes but not state taxes. New York employers should review all policies and documents for definitions of spouse, amend them as needed and be alert to state guidance.
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Compensation: Companies Maintaining Severance Plans Despite Recession Hardships, Survey Finds.
Daily Labor Report; no158 p A8 Aug 16, 2011; journal article

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Abstract : Survey results released by WorldAtWork in 2011 show that companies have not appreciably reduced their severance plans since 2009 despite the recession. The percentage of companies engaging in reductions in force dropped from 72 in 2009 to 57 in 2011. Over 80 percent of companies gave severance pay to workers laid off in reductions in force, and the percentage offering outplacement benefits and COBRA subsidies rose from 2009 to 2011. Nearly all firms with severance plans calculated the compensation based on years of service, with a majority capping the amount at 52 weeks' salary.
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Rescind Developments: Rescissions Under PPACA.
Tinnes, Christy; Winters, Brigen; PLANSPONSOR; v19 no5 pp 56-57 Aug 2011; journal article

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Abstract : The Patient Protection and Affordable Care Act generally bars rescission of health insurance coverage, but some common situations raise questions. A rescission cancels coverage retroactively, excluding situations where premiums or contributions are not paid or there is fraud or intentional misrepresentation of material facts. If a mistake has been made, the source and time of the mistake may determine whether rescission is permissible. A long standing mistake, such as failure to modify coverage for a change to part time work, with premiums still being paid and the employee relying on coverage, would argue against retroactive rescission. Adjustment based on a monthly HR data feed would not be permitted, not viewed as a rescission. Plans may also terminate coverage retroactively to the date of a COBRA qualifying event.
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Providing Post-Pink-Slip Support.
Koster, Kathleen; Employee Benefit News; v25 no5 pp 12, 14 May 2011; journal article

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Abstract : An economic side effect of employee layoffs is the cost of unemployment insurance, severance, COBRA and related corporate taxes. The DOL found employers' unemployment insurance tax costs for 2010 rose 34 percent over 2009 figures. Employers can reduce those costs by helping laid off workers locate new jobs quickly. Outplacement firms such as RiseSmart present job opportunities and informative resources about the job search, often providing support at the worksite and helping to maintain an ongoing association between employee and employer. The services also train management about resources available and indirectly reassure remaining employees. Critics argue spending this way undercuts morale and that the money could be better spent rewarding remaining employees.
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Notice 2011-28: Interim Guidance on Informational Reporting to Employees of the Cost of Their Group Health Insurance Coverage.
Internal Revenue Bulletin; no2011-16 pp 656-663 Apr 18, 2011; journal article

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Abstract : The Patient Protection and Affordable Care Act added Section 6051(a)(14) to be added to the Internal Revenue Code, establishing an employer's responsibility to provide information to employees on the aggregate costs of covered health care benefits. Most employers must provide cost information on Form W-2 starting with the 2012 tax year. The reporting must cover the aggregate cost of employer-sponsored coverage and has no impact on taxes. The disclosure does not apply to health savings accounts, Archer MSA, flexible spending arrangements, dental care, any coverage that would be taxed and several other exceptions. Employers filing fewer than 250 Forms W-2 for 2011 get transition relief and need not provide the information until tax year 2013.
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ERISA: Court Remands Former Employee's Action Over Misrepresentations on Plan Enrollment.
Maresca, Meredith Z.; Daily Labor Report; no72 p A3 Apr 14, 2011; journal article

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Abstract : Only when the plaintiff in Hansen v. Harper Excavating Inc. filed for COBRA coverage of significant medical expenses did he discover his employer never enrolled him in the health plan. The defendant had deducted premium payments but never submitted two rounds of enrollment forms and never informed the plaintiff. When the plaintiff filed for fraudulent nondisclosure and negligent misrepresentation, the defendant moved the case to federal court as an ERISA case and prevailed. On appeal, the Tenth Circuit Appeals Court determined the plaintiff was not a participant under ERISA when he filed the claim, and his claims were not entirely preempted. The court reversed the lower court's decision and freed the plaintiff to pursue his claims in state court.
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A Benefits Professional's Checklist for Mothering Terminated Workers.
Miller, Laurie S.; Employee Benefit News; v25 no4 p 12 Apr 1, 2011; journal article

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Abstract : Terminated employees, whether leaving voluntarily or involuntarily, need advice and assistance from HR. A checklist of HR actions by type of benefit is provided for handling benefits when employees are terminated for non-disability-related reasons. Two common issues are that an employer doesn't terminate the employee from insurance in a timely manner and legal issues when an employee dies and relatives assert a conversion policy would have been paid by the employee to leave a legacy to survivors.
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Imprudent Advice to Terminate Group Health Insurance.
Conlin, R. Dean; Farber, Timothy S.; Hansen, Laurence A.; Employee Benefit Plan Review; v65 no9 pp 24-28 Mar 2011; journal article

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Abstract : In the wake of the Patient Protection and Affordable Care Act, some producers and consultants are advising small employers to terminate group health insurance and provide workers with money to buy their own insurance. Despite the reassurances of those advising termination, most workers given such funds will not be eligible for most state health insurance pools. They may be subject to exclusions due to preexisting conditions and may have to pay taxes on their health coverage. Also, employers will find that if they create an arrangement that allows employees to pay for health coverage tax free they will still be subject to requirements under ERISA, COBRA and other federal laws covering group health plans.
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2011 COBRA Handbook.
Golub, I. M.; Chevlowe, Roberta K.; 616 pp 2011 2011 ed.; book

Availability : International Foundation of Employee Benefit Plans
Abstract : Offers a nontechnical explanation of COBRA continuation coverage, including advice on plan design and administration, model COBRA notices and other sample language. Contains the full text of the DOL and IRS final COBRA regulations.
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Health Insurance Answer Book.
Garner, John C.; 1,216 pp 2011 10th ed.; book

Availability : International Foundation of Employee Benefit Plans
Abstract : Provides succinct answers to an extremely broad range of health insurance topics—plan design, funding, federal and state regulation, cost management, quality assurance, communication and more. Addresses related topics such as dental insurance, vision coverage, mental health treatment, Medicare, employee assistance programs and wellness. Contains several model COBRA notices and a sample QMCSO procedure.
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Mandated Benefits: 2011 Compliance Guide.
1076 pp 2011; book

Availability : International Foundation of Employee Benefit Plans
Abstract : Comprehensive and practical guidance for dealing with the growing number of federal regulations that must be addressed by human resources (HR) managers and benefits specialists. Describes the essential requirements and administrative processes necessary to comply with each regulation. Suggestions are offered for avoiding the most common litigation threats and handling various types of employee problems. Includes numerous exhibits, checklists, forms, and do’s and don’ts. The Equal Pay Act, ERISA, COBRA, ADA, HIPAA, FMLA, Social Security, worker’s compensation and unemployment insurance is just a sampling of the laws, regulations and programs covered. A state-by-state guide to laws concerning temporary disability benefits, pay practices, workplace health and safety, layoff notices and drug testing is also included. Includes information on workplace ethics.
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Quick Reference to COBRA Compliance.
Sande, Pamela; Vigliotta, Joan; 507 pp 2011; book

Availability : International Foundation of Employee Benefit Plans
Abstract : A guide for employee benefits professionals who administer the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) with discussion regarding which employers and plans are covered, employee eligibility for coverage, administration, compliance requirements and penalties for noncompliance. Highlights include major points of health care reform, revised rules for coverage of children to age 26, updates regarding the expiration of the COBRA subsidy, and updates to HSA and HRA limits. Contains the full text of the law, related court cases, legislative analysis and model notices.
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U.S. Master Employee Benefits Guide.
Kennedy-Luczak, Kathleen; King, Melanie; Panszczyk, Linda; Potaczek, Carol; Turan, Tulay; 878 pp 2011 2011 ed.; book

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Abstract : This overview of all non-pension employee benefits discusses federal tax and employment laws and offers insight into daily issues that confront human resources and benefits personnel. Covers communicating benefits information to employees. Analyzes recent changes in the law and government rulings and regulations.
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Three Surveys Give Different Glimpses of COBRA Usage, Costs.
Managing Benefits Plans; no10-12 pp 13-14 Dec 2010; journal article

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Abstract : A survey by Hewitt Associates revealed that COBRA enrollment for June 2010 was 21 percent, lower than the rate during the period of the federal COBRA subsidy but higher than the historical 12 percent average. Enrollment was highest in June 2009 at 46 percent. An Employee Benefits Research Institute survey showed far fewer workers who were laid off took advantage of the federal COBRA subsidy, partly because of the high cost. Aon Consulting found former employers contributed more toward COBRA for laid off workers and their families in 2010 than in 2009, though employers will seek higher cost sharing with active employees in 2011.
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PPACA, Other Laws Challenge Health Benefit Plan Sponsors.
Forbes, Sean; BNA's Pension & Benefits Reporter; v37 p 2603 Nov 30, 2010; journal article

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Abstract : The Patient Protection and Affordable Care Act (PPACA) joins the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), the Genetic Information Nondiscrimination Act (GINA) and American Recovery and Reinvestment Act of 2009 (ARRA) in mandating changes to group health plan coverage. Changes under the PPACA include automatic enrollment of new workers in health plans for 200 or more, and prohibitions on benefit cuts for particular conditions and on higher cost sharing for grandfathered plans. GINA bans any discrimination regarding health benefits on the basis of genetic information, including financial incentives for targeted individuals. The MHPAEA mandates that treatment for mental health be comparable to medical and surgical benefits. The ARRA's federal subsidy for COBRA requires plan sponsors to pay premiums first and then request reimbursement.
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Ex-Spouse Not Entitled to Continued Health Care Coverage or Immediate Pension Plan Distributions.
Benefits & Compensation Digest; v47 no10 pp 53, 55 Oct 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In the case of Ludwig v. Carpenters Health & Welfare Fund of Philadelphia and Vicinity, the Third Circuit Court of Appeals dismissed the plaintiff's claims for continued health care coverage and pension distributions. The plaintiff had divorced a participant in the defendant's health and pension plans and won a distribution from the pension plans in the divorce. The plaintiff's COBRA coverage was discontinued because she had not given timely notice to the health plan of the divorce, and she was informed that the retirement plan distributions would be made when her ex husband was eligible to receive benefits. The court dismissed the plaintiff's federal and ERISA claims, noting on the ERISA claims that COBRA clearly requires notification within 60 days of a divorce and that ERISA specifically prohibits a qualified domestic relations order such as a divorce decree from requiring a plan to provide a benefit it would not otherwise provide.
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National Health Spending Projections: The Estimated Impact of Reform Through 2019.
Sisko, Andrea M.; Truffer, Christopher J.; Keehan, Sean P.; Poisal, John A.; Clemens, M. Kent; Madison, Andrew J.; Health Affairs; v29 no10 pp 1933-1941 Oct 2010; journal article

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Abstract : October 2010 projections of spending for health care between 2009 and 2019 indicate a 0.1 percent increase over forecasts made in February 2010. Year-by-year changes will vary. Short term factors include COBRA premium subsidies that expire in 2011, rising and then falling physician payments by Medicare and the early provisions of the Patient Protection and Affordable Care Act (PPACA). From 2015 to 2019 spending is expected to rise 6.7 percent, less than the previously projected 6.8 percent, pushed by insurance enrollment increases through 2016. Researchers forecast employer-sponsored coverage to drop very slightly by 2019. Health care spending is expected to constitute 19.6 percent of the gross domestic product in 2019, 0.3 percent higher than earlier projections estimated.
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