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.

Health Care Costs: Employers' Health Costs May Rise by 9 Percent in 2011, PwC Report Says.
Brown, Christopher; BNA's Pension & Benefits Reporter; v37 p 1429 Jun 22, 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : According to a study by Pricewaterhouse Coopers' Health Research Institute, employer health care costs will rise nine percent in 2011, down slightly from 2010's 9.5 percent increase. The study said that most of the early effects of the Patient Protection and Affordable Care Act of 2010 were relatively low impact, with the major effects of the Act expected in 2014. The biggest factors increasing health care costs in 2011 will be cost shifting from Medicare, provider consolidation and increased spending on electronic health record systems. Restraining influences on health care costs will include increased participant cost sharing, the shift to generic drugs and the return of COBRA costs to normal levels.
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Best Practices for a Reduction in Force: A Basic Checklist.
Reif, Alison F.; Gaulin, Lisa M.; Employee Relations Law Journal; v36 no1 pp 38-41 Summer 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : As soon as an employer decides that a reduction in force (RIF) is necessary, it should identify the people responsible for selecting affected workers and for implementing the RIF, consult legal counsel to identify obligations, keep discussions protected by attorney-client privilege and determine what notice obligations it has. If severance benefits will be offered, the employer should prepare written severance agreements and have legal counsel review them for meeting notice requirements for state and federal continuation of benefits statutes. Employers also must determine the amounts and distribution requirements of final paychecks, decide how to identify and retrieve company property in the hands of employees and inform affected employees of the RIF, ideally in person and as soon as possible.
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Examination of the Short-Term Impact of the COBRA Premium Subsidy and Characteristics of the COBRA Population.
Fronstin, Paul; EBRI Notes; v31 no6 pp 8-12 Jun 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The federal subsidy for COBRA started with the American Recovery and Reinvestment Act of 2009. Congress extended the availability three times from nine to 15 months and expanded the range of eligible individuals. It was expected to help seven million individuals in 2009, but fewer than expected took up the offer. From December 2008 to July 2009, there was no change in the percentage of workers using COBRA for health coverage through a former employer and a minimal increase among nonworking dependents. Data as of April 2009 may be too early to demonstrate any genuine effect of the subsidy on COBRA takeup, but data available in September 2010 may be more telling.
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New Excise Tax Reporting for COBRA Violations and Noncompliance With Other Health Plan Mandates.
Olsen, Gail M.; Ladwig, Susan U.; Employee Benefit Plan Review; v64 no12 pp 11-12 Jun 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In 2010, the IRS implemented a new requirement for group health plans to self report and pay excise taxes for failures to comply with COBRA and other federal group health plan and health savings account mandates. Excise taxes vary by violation, but the IRS says that they will not apply for any period in which those responsible could not reasonably have known about an inadvertent error. Excise tax will also not be assessed for failures for reasonable cause which are corrected within 30 days of when the responsible entity should have reasonably known of the failure. Correction is defined as retroactively undoing the failure and placing beneficiaries in a comparable position to where they would be if the failure had not occurred.
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COBRA Subsidy Update.
Chevlowe, Roberta; HR Advisor: Legal & Practical Guidance; v16 no3 pp 16-18 May-Jun 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The Temporary Extension Act of 2010 (TEA) effectively increases by one month the period an involuntarily terminated employee may qualify for a COBRA subsidy. TEA also expands the group of eligible individuals to include those who lost coverage through reduction in their work hours on or after September 1, 2008, and were subsequently terminated on or after March 2, 2010. The subsidy pays for 65 percent of COBRA premiums for eligible individuals, provided through the former employer, and the maximum subsidy period remains 15 months. Plan administrators must notify such individuals of their eligibility within 60 days of termination and may need to make other administrative changes. Failure to comply can lead to civil action, denial of the subsidy and daily penalties up to $110 for each failure.
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Health Care Reform: Reform Creates Fund to Reimburse Employers for Insuring Early Retirees, Adds Reporting.
Olsen, Florence; BNA's Pension & Benefits Reporter; v37 p 831 Apr 13, 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The audience for a webinar on the effects of the Patient Protection and Affordable Care Act (PPACA) heard benefits attorney Martin Moderson explain how the law affects health coverage for retirees 55 to 64 years of age. Employers who provided extended benefits can now tap into a $5 billion fund, established under PPACA, to pay claims up to $75,000 per individual per year. Guidance is anticipated from the IRS and Department of Health and Human Services. The funds should be available starting in September 2010 until 2014 or until depletion. PPACA bars employers from offering incentives to employees to waive COBRA and then dropping those workers from coverage. The law applies to all employers offering health benefits, not only those subject to ERISA.
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Health Care: CRS Says Few Workers Take COBRA Due to Costs; Congress Mulls Legislation.
Forbes, Sean; Daily Labor Report; no55 p A6 Mar 24, 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The cost of continuing health coverage under COBRA is too much for most unemployed individuals. In 2008 under ten percent of those eligible elected to take COBRA, down from 27 percent in 2006, the Congressional Research Service reported. The COBRA subsidy has not helped very much. Ceridian Corp.'s data on about 7.3 million employees shows fewer than 18 percent of eligible terminated workers took the subsidy, up from 12 percent in the three months before the subsidy became available. Limits in eligibility and coverage compound the challenge to takeup. Congressional bills would extend the duration of the subsidy, increase the subsidy and lengthen coverage until an alternative is available through a health insurance exchange.
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The COBRA Subsidy Extension: Deja Vu, but Much More.
Cowart, Greta E.; BNA's Pension & Benefits Reporter; v37 p 543 Mar 9, 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The Temporary Extension Act of 2010 (TEA), passed March 2, 2010, is a followup to the COBRA continuation subsidy and unemployment benefits provided at the end of 2009. The TEA extends the COBRA subsidy eligibility period to March 31, 2010, for workers involuntarily terminated from March 1 through March 31, 2010. It also safeguards employer determinations of who is considered involuntarily terminated and eligible for the subsidy as long as the determinations are reasonable, comply with available guidance and fully documented. If a worker was eligible for COBRA before March 2, 2010, but declined it, a subsequent involuntary termination renews the worker's eligibility. The TEA also includes substantial penalties for violations and more generous relief for the affected individual than available under ERISA.
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Guiding Clients Through the Transition to Medicare.
Buttell, Amy E.; Journal of Financial Planning; v23 no3 pp 24-29 Mar 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Planning for health care costs in retirement is as important as general retirement income planning, and financial planners must be educated to provide the guidance clients need. Total out-of-pocket health care expenses range from $100,000 to $300,000, excluding long term health care and depending on individual circumstances. Planners need to explore health status and expenses with clients and help them appreciate how soaring health care costs affect other aspects of their retirement life and plans. Early retirement before Medicare eligibility adds significant financial pressure. Planners should be able to help sort out options under Medicare including Medicare Advantage plans and drug plans. It may be best to hire a specialist or refer to an outside expert.
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The COBRA Subsidy Extension: A Brief Explanation.
Cowart, Greta E.; BNA's Pension & Benefits Reporter; v37 p 34 Jan 5, 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The Department of Defense Appropriations Act of 2010 included an amendment that extends the COBRA subsidy to allow 15 months of benefits. Those involuntarily terminated from work between September 1, 2008 and February 28, 2010, are eligible. The change requires employers to revise notices to employees. It also requires informing those eligible for assistance who stopped paying COBRA premiums before December 21, 2009, that they can be reinstated by retroactively paying the premiums. Employers should establish procedures for identifying affected employees, providing notice of the extension, calculating premiums and handling payments.
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Case a Wake-Up Call on COBRA Coverage.
Sharman, Joelle C.; Edwards, Heath H.; Benefits & Compensation Digest; v47 no1 pp 36-39 Jan 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The case of Harris v. United Auto Ins. Group Inc. highlights the importance of clear and specific plan document language addressing timing of COBRA payments. The plaintiff was dropped from the defendant's group health plan for failing to submit his COBRA payment on time, even given a grace period. The plaintiff maintained that mailing the payment on the due date met requirements, though the plan document specified a mailed payment must be postmarked by the due date. The plaintiff appealed the district court's dismissal of the count regarding payment timing, but the Eleventh Circuit Appeals Court upheld the decision. The appeals court noted the unambiguous plan language and the fact that Internal Revenue Code Section 54.4980B-8, governing payment timing between a plan and insurer, does not apply to the defendant self funded plan.
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COBRA and the Stimulus Act: A Sign of Things to Come?
Muldowney, Patrick M.; Compensation and Benefits Review; v42 no1 pp 24-29 Jan 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : One provision of the American Recovery and Reinvestment Act of 2009 (ARRA) requires employers to subsidize COBRA premiums for involuntarily terminated employees. The requirement is only for employees and beneficiaries of employees terminated between August 31, 2008 and January 1, 2010, and employers must pay at least 65 percent of COBRA premiums for nine months. Employers can recover the subsidy as a payroll tax reduction if they follow certain reporting requirements. Individuals who experienced a qualifying event and who were not provided with an ARRA election notice must receive a general notice on COBRA rights, including a description of the premium subsidy and forms for determining eligibility.
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COBRA Outsourcing: What You Need to Know.
Meharry, Brian; Jancar, Kristi; Journal of Compensation and Benefits; v26 no1 pp 20-23 Jan-Feb 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The American Recovery and Reinvestment Act of 2009 was the first of what may be many changes to COBRA legislation. COBRA administration is already a time and resource consuming process, and improper administration can lead to excise tax penalties. Outsourcing COBRA administration can mitigate the risk of noncompliance penalties, allow employees to devote their time to more productive work and act as a buffer between human resources departments and former employees. Potential downsides of COBRA outsourcing include lack of direct control, the coordination of multiple service providers, lack of COBRA experience in house and the difficulty in changing administrators.
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Election Changes for FSA Plans.
LeTourneau, Janet; Broker World; v30 no1 pp 70-71, 73 Jan 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Changes may be made to existing flexible spending account (FSA) elections when a change in status, cost or coverage occurs and the election change satisfies the consistency rule. The consistency rule, applying to each participant separately, essentially states that the change in election must correspond with a change in status that affects that plan year's eligibility under the employer's plan. There is an exception in cases where the participant becomes eligible for COBRA under the employer's group health insurance plan.
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Employee Benefits for "Citizen Soldiers": USERRA and Beyond.
Greer, Anita C.; Fiut, Jeffrey T.; Journal of Pension Benefits; v17 no2 pp 27-32 Winter 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The Department of Defense reported in June 2009 that over 140,000 active duty soldiers were so-called citizen soldiers, nonmilitary workers who left their careers to serve when needed. Laws including the Uniformed Services Employment and Reemployment Rights Act of 1994 and the Heroes Earnings Assistance and Relief Tax Act of 2008 (Heroes Act) help protect the benefits of those who leave civilian employment for military service. USERRA's provisions are intended to ensure reemployment for returning service members, protect their benefits and prevent discrimination for fulfilling military service obligations. Employers can help ensure compliance by treating returning service members as if they had never left. The Heroes Act addresses several issues not covered by USERRA, including rolling over death benefits to an IRA and tax concerns for employers wishing to compensate service members for the difference between their civilian and military pay. While USERRA and the Heroes Act are the two biggest pieces of legislation targeting treatment of employees in military service, a number of special rules for service members are incorporated into laws affecting all employees.
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Planning for Employee Benefit Plans During a Period of Economic Downturn.
Shanks, Bill; King, Jimmy; Journal of Compensation and Benefits; v26 no1 pp 24-33 Jan-Feb 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : During periods of economic downturn, employers may save costs by reducing or eliminating benefits or jobs, but they should be aware of the legal consequences of those actions. Reductions of defined benefit pension plans must be accompanied by advance written notice of the changes, delivered at least 15 days before the effective date of the change to all participants and alternate payees who might reasonably be affected. Terminations of pension plans involve a confluence of ERISA, IRS regulation, labor law, contract law and bankruptcy law, although the termination of a defined contribution plan is significantly easier than that of a defined benefit plan. Large scale employment terminations can lead to partial plan terminations as well. Employers should also be aware of the potential consequences of COBRA, especially in light of changes made by the American Recovery and Reinvestment Act of 2009, of hardship distributions and of severance plans.
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COBRA Handbook.
Golub, I. M.; Chevlowe, Roberta K.; 555 pp; 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.; 915 pp 2010 9th ed.; book

Availability : International Foundation of Employee Benefit Plans
Abstract : Covers a broad range of health insurance topics, including lan design, funding, federal and state regulation, cost management, quality assurance and communication. Also addressed are related topics such as dental insurance, vision coverage, mental health treatment, Medicare, employee assistance programs and wellness. Case law citations and examples are provided in straightforward language. Includes several model COBRA notices and a sample QMCSO procedure. New in this edition: information on vendor selection; updated guidance on health savings accounts; results from the 2008 United Benefit Advisors survey of plan design and plan costs, that includes responses from small and midsized employers which sponsor most of the health plans in the United States.
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Mandated Benefits: 2010 Compliance Guide.
1111 pp 2010; 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 2010; 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. In addition to the full text of the law, contains related court cases, legislative analysis and model notices.
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COBRA Premium Subsidy Extended.
Segal Company: Bulletin; pp 1-2 Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In December 2009, President Obama signed into law an extension of COBRA premium assistance, which had been established through the American Recovery and Reinvestment Act. The window for premium assistance eligibility expands to the end of February 2010, and the total length of subsidy grows from nine months to 15 months. The law includes a change to an IRS interpretation to protect those who are laid off at the end of the eligibility window and not eligible for COBRA until the next day. It also permits those whose subsidy ran out to retroactively pay premiums and extend coverage. Plan administrators face notification requirements, some requiring mailing by February 17, 2010.
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Court Upholds Denial of Benefits to Participant's Former Spouse.
Benefits & Compensation Legal & Legislative Reporter; v43 no12 p 9 Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The plaintiff in Ludwig v. Carpenters Health & Welfare Fund of Philadelphia & Vicinity et al. is the ex wife of a participant in health, savings and pension plans. The divorce decree detailed awards for the plaintiff, including pension and savings shares, lump sum distribution timing and COBRA eligibility. Seven months after the divorce, the plans got written notice of the event. The plans notified the plaintiff that the divorce decree conditions could not be met, and she was ineligible for COBRA because notification occurred after 60 following the qualifying event. The U.S. District Court for the Eastern District of Pennsylvania upheld the plan administrator on all counts. The court found insufficient evidence for an equitable estoppel claim based on an alleged misrepresentation by a union member about continuing health coverage, and found no right to lump sum distributions.
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Keys to Evaluating Your COBRA Administrator.
Whitney, Jennifer; Employee Benefit News; v23 no15 pp 39-40 Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : With rapid changes in COBRA administration, having a good third party administrator (TPA) to rely on is increasingly important for many employers. Good TPAs keep up with regulatory changes and communicate their effects and implications quickly to employers, employees and beneficiaries. They collect and reconcile premiums, monitor and report on eligibility, keep data secure and provide timely interim reports at an employer's request. Contracts should document all responsibilities and compliance with the Health Insurance Portability and Accountability Act, reflect a fair balance of liability and specify the state for any arbitration. An honest assessment of the TPA's prospects for merger or acquisition can avoid surprises.
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New York Expands Health Insurance Coverage for Terminated Employees and Young Adults.
Weyeneth, Jamie A.; Employee Benefit Plan Review; v64 no6 pp 16-18 Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : In late 2009, New York's governor signed into law an expansion of the state's mini-COBRA rules and a requirement that insurance companies offer policies covering employees' dependents through age 29. Effective for new or amended contracts dated July 1, 2009 or after, the mini COBRA rule extends health coverage from 18 months to 36 months for those who lose their job, with rates up to 102 percent of the full premium. Group health insurance policies must also offer extended coverage to unmarried dependents under 30 years of age. Dependents eligible for coverage through their own jobs or through Medicare are not included. The requirement does not apply to self insured coverage, but employers with both insured and self insured coverage may choose to streamline their eligibility rules. Insurers must provide notice of availability.
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The Broader HR Advisory Role of Employee Benefit Brokers.
Arnstein, Kevin; Employee Benefit Plan Review; v64 no6 pp 5-6 Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Benefit brokers can become more valued consultants to HR executives and employees by going beyond their traditional role. They should actively help HR design the best health care benefits program, explore funding options, suggest vendors that meet cost and service requirements and then help negotiate prices. Their involvement should continue through monitoring claims and service, acting as an ombudsman when indicated. Standout brokers help members understand how to navigate filing claims, manage participation details, transition to COBRA and handle problems. The broker's advisory contribution extends to employee benefits communications and promoting employee satisfaction with the plan.
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