Posted on February 17th, 2009 by Chad De Groot | No Comments »
Filed under: Employee Benefits, HR Issues, Politics, The Financial Crisis | 
The Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) requires covered employers to permit certain individuals who endure a qualifying event, to continue to receive benefits/coverage under the employer-provided health plan for a given period of time. This is often referred to as “continuation coverage.”
Employers can, and generally do, charge former employees and/or their dependents up to 102% of the premium that the employer would have paid for the coverage had the individual and/or his dependents continued to be covered by the plan. In addition to multiple other notices employers are required to provide with respect to COBRA, employers must provide notice of the availability of COBRA to each covered employee at the time of termination of employment.
The American Recovery and Reinvestment Act of 2009 (ARRA), which the President signed into law this afternoon, provides for a 9 month, 65% subsidy for COBRA premiums for coverage periods beginning on or after March 1, 2009, for those individuals who lost/lose their jobs between September 1, 2008 and December 31, 2009.
Employers must provide notice to all former employees and their dependents to whom this subsidy is available. In other words, employers must provide additional notice to those former-employees who were already laid off and already provided the “regular” COBRA Notice.
Consistent with current COBRA requirements, the subsidy will no longer be available to individuals who become eligible under another health plan, and the subsidy is not available to individuals with annual income exceeding $145,000 and couples with income exceeding $290,000.
Posted on January 28th, 2009 by Chad De Groot | 1 Comment »
Filed under: ., Employee Benefits, HR Issues |
On Monday, the Supreme Court unanimously ruled that a plan administrator must act in accordance with plan documents in determining who is a proper beneficiary under a plan even though that beneficiary previously waived his/her rights to a benefit under the plan via divorce decree.
Kennedy v. Plan Administrator for DuPont Savings and Investment Plan has a fact pattern that is quite common in the HR realm, and a decision that should be heeded by all plan administrators. Mr. Kennedy was a participant in the DuPont Savings and Investment Plan. Under the plan, Liv Kennedy, his wife at the time, was named beneficiary. The two were later divorced and under the divorce decree Liv waived her rights as beneficiary under the plan. Mr. Kennedy, however, never changed his beneficiary designation under the plan prior to his death. Following his death, Mr. Kennedy’s daughter, as executrix of his estate, requested that the assets of his account under the plan be distributed to the estate. The plan administrator, however, relying on the plan documents and the beneficiary designation thereunder, paid the benefits to Liv.
The Court held that because a plan administrator has a duty, in accordance with Section 404(a)(1)(D) of ERISA (29 U.S.C. 1104 for you labor people), to administer a benefits plan in accordance with the plan documents, and the plan documents, or Mr. Kennedy’s beneficiary designation, named Liv as his beneficiary, the plan administrator was acting in accordance with the plan documents when it distributed Mr. Kennedy’s assets to Liv, even though they had divorced.
Although the outcome seems unfair, it is a necessary one to ensure consistent plan interpretation and operation. Mr. Kennedy had every opportunity to change that beneficiary designation. Although the divorce decree may have led him to believe that the beneficiary designation would be voided, the onus of determining proper beneficiaries cannot be put on the plan administrator. To do so would require every plan administrator to shoulder the additional burden of determining a deceased participant’s intent irrespective of his beneficiary designation.
Posted on November 19th, 2008 by Tim Eavenson | No Comments »
Filed under: Employee Benefits, HR Issues, Politics |
The presidential election is upon us. And you’ve probably notice that, aside from healthcare, workplace issues have not played a very substantial role in the national debate. With the economic crash, there’s a little more talk of job creation and all, but what do the candidates really believe, and what will they do after they take office, in a year slated to be one of the biggest on record for changes in employment legislation?
This is the first in a series of reports I will post on where the candidates stand on employment law issues, starting with the one you probably know a little about already – healthcare. Specifically, the employer’s role in providing health insurance.
Going into the campaign season, it was pretty clear that employer-based healthcare coverage wouldn’t leave the next administration untouched, regardless of which party wins. It was a common theme in the primary debates on both sides, with theories ranging from replacing Medicaid with mandatory pro bono care (Paul) to a full-on government-run single payer system for everybody (Kucinich).
Neither front runner endorses either of these extremes (with a democratic asterisk, noted below), so what do they think?
Senator McCain
McCain, true to his nature, is not easily pigeonholed as most of his right-wing compatriots. He has stood against his party’s platform on some key healthcare issues, supporting plans to import drugs from Canada and mandate uniform online recordkeeping.
That said, he has been clear (especially this year) that healthcare reform means individualizing health insurance. McCain’s platform includes providing families a $5,000 tax credit (individuals get $2,500) with which to purchase individual insurance (as opposed to employer-based insurance). He also supports eliminating the interstate restrictions (i.e., state-by-state regulations of insurance plans), so people could “shop around” for the best coverage. This interstate competition would, in his view, bring down cost. Because of the emphasis on individual plans, as opposed to employer-based health insurance, McCain would (for the first time ever, as his opponent likes to point out) tax money used to pay insurance premiums as income.
McCain’s plan has been criticized as being a subversive way of ending employer-based health insurance, and he has not done much to refute those allegations. Many republicans believe that the future of healthcare lies in giving the populace incentives to govern their own care, and McCain would fall pretty squarely into this camp. He has said that “socializing” healthcare would ruin it.
We’ll end with a quote from one of the primary debates, summarizing his plan:
Q: What would you do to curb the high cost of medical health care & to help those who don’t have health insurance?
A: The real question is: How are we going to keep health care costs down, because we have the highest quality of health care in the world in America today? And unlike the Democrats, I’m going to preserve that quality of health care, and at the same time stop the inflation & the skyrocketing costs of health care. And there’s a couple of principles:
- To make the recipient of the health insurance much more responsible in health-care costs.
- To address wellness & fitness.
- To give every American family a $5,000 refundable tax credit so they can go anyplace in America to acquire the health insurance policy that best suits their needs.
- And, if they’ve got money left over, then invest it in a health savings account.
Ronald Reagan said nobody ever washed a rental car. And that’s true in health insurance. If they’re responsible for it, then they will take more care of it.
Senator Obama
Obama’s plan has been one of the cornerstones of his campaign, and also one of the footholds for the “socialist” moniker bestowed upon him of late. As I said, Obama does not come down on the totally public, not-for-profit, government-payer healthcare plan championed by far-left candidate Dennis Kucinich. But there’s an important caveat to his policy there. His reasons for establishing middle ground on healthcare reform are not based on his ideals so much as what he can effectively accomplish. Here’s a quote from Obama’s website:
“Here’s the bottom line. If I were designing a system from scratch I would probably set up a single-payer system…But we’re not designing a system from scratch…And when we had a healthcare forum before I set up my healthcare plan here in Iowa there was a lot of resistance to a single-payer system. So what I believe is we should set up a series of choices….Over time it may be that we end up transitioning to such a system. For now, I just want to make sure every American is covered…I don’t want to wait for that perfect system…”
So, the issue for Obama is what will work today, but single-payer (universal, government-run) healthcare is still his ideal. That said, he’s made it clear that his proposal is not single-payer, and gives people the right to choose.
Obama would give Americans the right to keep the coverage they have, or buy into a government plan that is comparable to the coverage he has as a Senator. He would help pay for it by making employers who didn’t provide coverage for their employees pay an extra tax (small businesses would be exempt).
Obama would also eliminate the insurance companies’ ability to deny coverage because of preexisting conditions, something that causes a lot of people to go uninsured now, but would probably raise premiums for small business providing their employees coverage. Because of this dichotomy (among others) Obama’s system is criticized as the opposite of McCains – a veiled method of instituting “socialized medicine,” or the single-payer plan he endorses but claims is unworkable.
Like McCain, he has said he would emphasize online organization of medical records, but would go even farther, providing federal funds to encourage more automation and organization in the system altogether, to reduce costs.
We won’t make predictions as to who’s going to win next week, nor will we try to make one guy sound smarter than the other. That’s up to you. Next time we’ll talk HR policy, so look for that post soon.
[Unless otheriwse noted, facts and quotes from OnTheIssues.org]
