COBRA Subsidies End August 31, 2011 — Should You Notify Employees?
By Connor A. Sabatino
The American 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 subsidized amount.
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 (http://tinyurl.com/3dd5yyv), as well as a list of Frequently Asked Questions.
IMAGE: Are You Ready to Join?
By Alan Seagrave
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 (http://www.ice.gov/image/). 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 (http://tinyurl.com/yslx4b), 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 the Social Security Number Verification Service (http://www.ssa.gov/employer/ssnv.htm) 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 (http://tinyurl.com/3na3bd4) 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) (http://tinyurl.com/3j3kacx) for additional information on I-9 audits.
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 Neuberger [email protected].
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 other age?
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 decision.
This week’s question: (Suggested by a loyal subscriber) What pension scheme operated by the federal government predated social security?
Legal News is part of our ongoing commitment to providing legal insight to our clients and colleagues. If you have any questions about or would like to discuss these topics further, please contact your Foley attorney or the authors of this week’s issue.
