Archived Benchmark Articles

Archived Benchmark Articles

June 9, 2009

COBRA

COBRA gives workers who lose their jobs, and thus their health benefits, the right to purchase group health coverage provided by the plan under certain circumstances.

If the employer continues to offer a group health plan, the employee and his/her family can retain their group health coverage for up to 18 months by paying group rates. The COBRA premium may be higher than what the individual was paying while employed but generally the cost is lower than that for private, individual health insurance coverage.

The plan administrator must notify affected employees of their right to elect COBRA. The employee and his/her family each have 60 days to elect the COBRA coverage, otherwise they lose all rights to COBRA benefits.

Note: COBRA generally does not apply to plans sponsored by employers with less than 20 employees. Many States have similar requirements for small plans providing benefits through an insurance company. The premium reduction is available for plans covered by these State laws.

Changes Regarding COBRA Continuation Coverage Under ARRA

Premium Reduction:  The premium reduction for COBRA continuation coverage is available to “assistance eligible individuals”.

An “assistance eligible individual” is the employee or a member of his/her family who:

  • is eligible for COBRA continuation coverage at any time between September 1, 2008 and December 31, 2009;
  • elects COBRA coverage; and
  • is eligible for COBRA as a result of the employee’s involuntary termination between September 1, 2008 and December 31, 2009.

Those who are eligible for other group health coverage (such as a spouse’s plan) or Medicare are not eligible for the premium reduction. There is no premium reduction for premiums paid for periods of coverage prior to February 17, 2009.

ARRA treats assistance eligible individuals who pay 35 percent of their COBRA premium as having paid the full amount. The premium reduction (65 percent of the full premium) is reimbursable to the employer, insurer or health plan as a credit against certain employment taxes. If the credit amount is greater than the taxes due, the Secretary of the Treasury will directly reimburse the employer, insurer or plan for the excess.

The premium reduction applies to periods of coverage beginning on or after February 17, 2009. The premium reduction for an individual ends upon eligibility for other group coverage (or Medicare), after 9 months of the reduction, or when the maximum period of COBRA coverage ends, whichever occurs first. Individuals paying reduced COBRA premiums must inform their plans if they become eligible for coverage under another group health plan or Medicare.

Special COBRA Election Opportunity:  Individuals involuntarily terminated from September 1, 2008 through February 16, 2009 who did not elect COBRA when it was first offered OR who did elect COBRA, but are no longer enrolled (for example because they were unable to continue paying the premium) have a new election opportunity. This election period begins on February 17, 2009 and ends 60 days after the plan provides the required notice. This special election period does not extend the period of COBRA continuation coverage beyond the original maximum period (generally 18 months from the employee’s involuntary termination). COBRA coverage elected in this special election period begins with the first period of coverage beginning on or after February 17, 2009. This special election period opportunity does not apply to coverage sponsored by employers with less than 20 employees that is subject to State law.

Notice: Plan administrators must provide notice about the premium reduction to individuals who have a COBRA qualifying event during the period from September 1, 2008 through December 31, 2009. Plan administrators may provide notices separately or along with notices they provide following a COBRA qualifying event. This notice must go to all individuals, whether they have COBRA coverage or not, who had a qualifying event from September 1, 2008 through December 31, 2009.

Individuals eligible for the special COBRA election period described above also must receive a notice informing them of this opportunity. This notice must be provided within 60 days following February 17, 2009.

June 27, 2008

Employer Alert ! New I-9 Form Released – Inspections Underway By Elaine Smith, SPHR Owner and Managing Consultant, Benchmark Outsourcing Group

New I-9 forms were recently released and a high profile effort is underway to ensure that employers are complying with the letter of the law relative to documenting employee eligibility to work in this country. Although this is required of all employers, it should be noted that when the OFCCP audits a Government Contractor, they are required to produce the I-9’s are a part of the compliance review. Many employers are not aware that the I-9 Form which was just updated last year was released again on June 27, 2008 by the USCIS. The new form was issued because of the Paperwork Reduction Act which requires the Office of Management and Budget (OMB) to have current expiration dates on all approved forms. Although the content of the form has not changed since last year, the new form is identified by OMB No. 1615-0047: Expires 06/30/09, which appears in the top right corner of the form. Benchmark strongly suggests that employers begin using this form immediately. A copy of the new form and instructions on how to complete the I-9 can be found at http://www.uscis.gov/files/form/I-9.pdf Not only is it important to use the new form, but it is also very important to understand that the I-9 must be completed in it’s entirety with no information or signatures missing. Missing information will prompt penalties and cause the form to be invalid. The form must be completed on all employees working in the U.S. after November 6, 1986. The Employee portion (Section I) of the form must be completed at the time of hire and must be completed by the employee or a preparer/translator if the employee is unable to complete the form on his or her own. Even if completed by a person other than the employee, the employee must still sign this section.The Employer’s portion (Section II) provides evidence that the employer examined evidence of identity and employment eligibility within three (3) business days of the hire date. If the employee is unable to produce this documentation, he or she may present a receipt of an application for the documentation within the three day limit and the actual documentation must be presented within 90 days of hire. By recording the document title, issuing authority, document number, expiration date, date of employment and signing the form, the employer’s representative is verifying that he or she actually saw this eligibility documentation. Many employers make copies of the documentation although this is not a requirement, however, the I-9 must be kept for three (3) years after the date of hire or one (1) year after the date employment ends, whichever is later. Benchmark recommends keeping the documents for this period of time as a minimum and longer if possible even though this is not required. The form must be updated and reverified (Section III) if an employee’s name has changed or if they are rehired within three years of the original completion date whether or not there is a change in the status or information on the previous form. A blank I-9 Form can be reproduced provided both sides of the document are copies. Although completion of the form is voluntary for employees, employers have a strict mandate that they cannot allow an employee to work unless they complete the form and produce the required documentation or receipt within the three day limit. Employers cannot specify which documentation they can accept from the employee, however, there is a list of acceptable documents listed on page 2 of the form. Employees select documents that establish both identify and employment eligibility from List A, or they can select a document that establishes identity from List B and one that establishes employment eligibility from List C. The I-9 form should be kept by the employer for inspection by officials of the U.S. Immigration and Customs Enforcement, Department of Labor and Office of Special Counsel for Immigration Related Unfair Employment Practices. However, a new campaign is now underway by U.S. Immigration and Customs Enforcement to inspect I-9 documentation by service of a subpoena on companies suspected of employing unauthorized workers and requesting I-9 Forms for all current employees and those terminated within the past year. Civil fines for companies that are not in compliance are now 25% higher than in the past and given on a per-alien basis. There are also fines for not completing the form correctly or leaving portions of the form blank or without signatures.