COBRA Notices On Hold Again – Extension Uncertain
For COBRA Notices It’s Déjà Vu All Over Again
If you’re responsible for administering your company’s COBRA compliance program, the last few months may seem like a scene out of the movie Groundhog Day. Let us assure you that you’re probably not reliving the same COBRA nightmare on a daily basis, but monthly perhaps.
As most of you know, the latest in a series of extensions–4 to be exact–of the COBRA subsidy expired on June 1, 2010. The Senate left for its Memorial Day recess last week, deferring any action on a bill that would extend the COBRA subsidy. The American Workers, State, and Business Relief Act of 2010 (HR 4213) would have extended the COBRA subsidy to employees experiencing an involuntary termination through November 30, 2010.
Earlier this year, both the House and Senate passed separate versions of a bill that would have extended the subsidy to involuntary terminations occurring through December 31, 2010, but in an effort to win votes from a handful of suddenly budget-conscious House moderates on the eve of the Memorial Day recess, Democrat leaders agreed to an amendment scaling back the benefit extension by one month.
Despite the amendment, House leaders feared they still could not secure enough votes to pass the bill before the recess and so they removed entirely the COBRA subsidy extension language from the bill, which then passed the House.
House members continue to debate a possible COBRA subsidy extension, but with the Senate in recess until June 7, we do not expect any significant action on the COBRA subsidy until Senators return.
The ultimate fate of the COBRA subsidy is now uncertain. Congress could go forward with an extension of the same 15-month and 65% subsidy, it could shorten that extension or reduce the duration or level of the subsidy, or simply let the COBRA subsidy program expire. Democrat leaders in the House have publicly discussed each of these options.
With this much uncertainty–again–we recommend taking a wait and see approach with your COBRA notices for involuntary terminations. If Congress extends the subsidy in any way, DOL will require employers to send out new COBRA notices reflecting the new eligibility dates. Rather than acting on your current reading of the Congressional tea leaves, we recommend putting your current COBRA notice program on hold for any involuntary termination occurring on or after June 1, 2010. As you know, employers have 30 days to notify their plan administrator of an employee termination (and the plan administrator–even if it’s the employer–then has 14 days to send a COBRA notice to qualified beneficiaries), so holding that process until the legislative picture is clearer still gives employers sufficient time to send out whatever notice may be required by any extension Congress passes.
To learn more about COBRA go to http://www.dol.gov/ebsa/COBRA.html.
This update was provided by Worklaw Network firm Lehr Middlebrooks and Vreeland (www.lehrmiddlebrooks.com).