Labor Department Gears Up To Enforce COBRA Premium Subsidy Rules

May 29, 2009

Pressure is mounting for group health plans and their employer and other sponsors and administrators to complete the details required to comply with special medical coverage continuation rules (COBRA Subsidy Rules) added to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA) by the American Recovery and Reinvestment Act of 2009 (Stimulus Bill). 

The U.S. Department of Labor Employee Benefits Security Administration (EBSA) recently (May 21, 2009) announced its appeal process for assistance eligible individuals to use to complain to the EBSA when they believe they wrongfully have been denied a premium subsidy for their group health plan continuation coverage in violation of the temporary modifications (COBRA Subsidy Rules) to the group health plan medical coverage continuation requirements of the COBRA Stimulus Rules.  These are the expedited complaint and appeals procedures mandated under the Stimulus Bill.

The COBRA Subsidy Rules, new genetic information nondiscrimination rules and other recent and impending changes to federal health plan eligibility mandates will be explained on June 23, 2009 during a 2009 Health Plan Eligibility Update briefing hosted by the Dallas Human Resources Management Association.  Get  details or register here.

The Stimulus Bill allows individuals denied the premium subsidy to get expedited review by the EBSA. Under the appeals procedures announced May 21, individuals begin this review process by completing an appeals application available on line at http://www.dol.gov/ebsa/COBRA/main.

Employers and group health plans and their plan administrators and plan insurers have been required to provide notifications and COBRA premium subsidies for certain former employees and their dependents that qualify as assistance eligible individuals and take other actions to comply with the COBRA Subsidy Rules since the COBRA Subsidy Rules took effective on February 17, 2009.  While many employers and plan administrators undertaken some efforts to comply with these new COBRA mandates,  many still have not fully completed all of the compliance arrangements.

With procedures to receive and administer appeals, the EBSA now is prepared to investigate possible violations of the Stimulus Bill COBRA rules.  Accordingly, employers, plan administrators and insurers sponsoring or administering group health plan should prepare to respond to investigations that may be initiated by the filing of a request for EBSA review.

You can read details about the COBRA Subsidy Rules here.

 

Stimulus COBRA Rules In A Nutshell

Congress enacted the COBRA Subsidy Rules that took effect February 17, 2009 to help certain involuntarily terminated former employees and their dependents maintain COBRA coverage by requiring COBRA-covered group health plans temporarily to extend certain special COBRA treatment for “assistance eligible individuals.”

The Stimulus Bill temporarily limits the COBRA premium that a COBRA-covered group health plan can require an “assistance eligible individual” to pay for COBRA Coverage to 35% of the otherwise applicable COBRA premium (the “Reduced Premium”) for a period of up to 9 months (the “Subsidy Period”) beginning with the individual’s first period of COBRA Coverage beginning after February 17, 2009.  The employer or insurer that collects this Reduced Premium must pay the remaining 65% of the COBRA premium (the “COBRA Subsidy”) for the assistance eligible individual during the Subsidy Period.  However, the Stimulus Bill provides for that employer or insurer to claim a payroll tax credit equal to the amount of these COBRA Subsidy payments by complying with applicable IRS procedures. 

The Stimulus COBRA Rules also requires group health plans to offer a second COBRA enrollment period to each assistance eligible individual not enrolled in COBRA Coverage on February 17, 2009.  These second electors must be allowed to elect prospectively to enroll in COBRA coverage until the date that their COBRA Coverage eligibility otherwise would have ended if they had maintained COBRA Coverage since their termination.

Additionally, COBRA-covered group health plans that offer employees different plan options allow assistance eligible individuals the option to change their coverage choice from a higher cost option to a lesser cost option.  Group health plan administrators also must provide certain notifications to assistance eligible individuals concerning these changes.

 

“Assistance Eligible Individuals”

The Stimulus COBRA Rules only apply to qualified beneficiaries whose loss of coverage resulted from the “involuntary termination of employment” of a covered employee. The Stimulus Bill definition of “assistance eligible individual” generally includes any COBRA “qualified beneficiary” who meets all of the following requirements:

ü       Has a loss of coverage within the meaning of COBRA (“qualifying event”) as a result of the “involuntary termination of employment” of a covered employee from September 1, 2008 to December 31, 2009;

ü       Is eligible for COBRA Coverage at any time during the period beginning September 1, 2008 and ending December 31, 2009; and

ü       Elects COBRA coverage when first offered or as during the additional second election period required for assistance eligible individuals not enrolled in COBRA Coverage on February 17, 2009.

IRS Notice 2009-27 defines an “involuntary termination” as “a severance from employment due to the independent exercise of the unilateral authority of the employer to terminate the employment, other than due to the employee’s implicit or explicit request, where the employee was willing and able to continue performing services” based on all the facts and circumstances. 

For COBRA Premium Assistance purposes, the facts and circumstances determine whether a termination is involuntary. Thus, IRS Notice 2009-27 states that a termination designated as voluntary or as a resignation nevertheless will be considered involuntary where the facts and circumstances indicate that the employer would have terminated the employee’s services, and that the employee had knowledge that the employee would be terminated.

Notice 2009-27 identifies as examples of terminations that fall within this definition of “involuntary termination” as including the following facts and circumstances:

ü       The employer’s failure to renew a contract at the time the contract expires, if the employee was willing and able to execute a new contract providing terms and conditions similar to those in the expiring contract and to continue providing the services;

ü       An employee-initiated termination from employment if the termination from employment constitutes a termination for good reason due to employer action that causes a material negative change in the employment relationship for the employee;

ü       An involuntary reduction of hours of employment to zero hours, such as a lay-off, furlough, or other suspension of employment, resulting in a loss of health coverage;

ü       An employee’s voluntary termination of employment in response to an employer imposed reduction of hours of employment where the reduction in hours is a material negative change in the employment relationship for the employee;

ü       An employer’s action to end an individual’s employment while the individual is absent from work due to illness or disability (but not mere absence from work due to illness or disability before the employer has taken action to end the individual’s employment);

ü       A termination designated on account of “retirement” if the facts and circumstances indicate that, absent retirement, the employer would have terminated the employee’s services, and the employee had knowledge that the employee would be terminated;

ü       The covered employee resigned as the result of a material change in the geographic location of employment for the employee;

ü       A lockout initiated by an employer but not a work stoppage as the result of a strike initiated by employees or their representatives; and

ü       A termination elected by the employee in return for a severance package (a “buy-out”) where the employer indicates that after the offer period for the severance package, a certain number of remaining employees in the employee’s group will be terminated

Notice 2009-27 also clarifies that the termination of employment giving rise to the loss of group health plan coverage and the loss of the group health plan coverage both must occur between September 1, 2008 and December 31, 2009 in order for an individual to qualify as an assistance eligible individual. Consequently, if the involuntary termination occurs before September 1, 2008, but the loss of coverage resulting in eligibility for COBRA Coverage occurs after September 1, 2008 (but no later than December 31, 2009), Notice 2009-28 states that the individual will not qualify as an assistance eligible individual.  Likewise, where an individual’s involuntary termination occurs by December 31, 2009, but the loss of coverage resulting in eligibility for COBRA Coverage occurs after December 31, 2009, the qualified beneficiary will not qualify as an assistance eligible individual for purposes of the Subsidy COBRA Rules.  According to Notice 2009-27, where the involuntary termination of employment and loss of coverage as a covered employee or dependent occur between September 1, 2008 and December 31, 2009, the election of COBRA Coverage need not occur by December 31, 2009.

Many group health plans are drafted to provide that the date that employee or dependent coverage ends or changes as a result of an employment loss is the last day of the month or some other date after the actual date of the employment termination.  Under group health plans where the loss of coverage due to the qualifying event is delayed, Notice 2009-27 also reminds employers and plan administrators of the need to focus on how group health plan provisions, separation agreements and other related documents define when the loss of coverage occurs under a group health plan when applying these rules.

For purposes of COBRA, Notice 2009-27 states that when a loss of coverage under a group health plan occurs under these circumstances depends on how the group health plan treats the provision of health coverage between the date of the employment loss and the date of the resulting loss of employee and/or dependent coverage. If the plan treats the provision of health coverage as deferring the loss of coverage, Notice 2009-27 indicates the loss of coverage generally occurs when the individual ceases to be entitled to employee or dependent coverage on the same terms and conditions as would have applied had he not experienced the qualifying event.  However, if the plan treats the continued provision of health coverage from the termination date until employee or dependent coverage later ends as a result as reducing the period of required COBRA Coverage, then the loss of coverage occurs on the termination date or other later date.  Appropriate drafting is important to support the desired characterization.

 

Calculation of 35% of COBRA Premium

Based on the guidance in Notice 2009-27, many employers will want to terminate severance or other arrangements under which former employees are allowed to pay less than the maximum COBRA premium for some period of time.  According to Notice 2009-29,.the premium used to determine the 35% share that must be paid by (or on behalf of) an assistance eligible individual is the cost that would be charged to the assistance eligible individual for COBRA Coverage if the individual were not an assistance eligible individual. If absent the Stimulus COBRA Rules, the group health plan would require the assistance eligible individual to pay 102% of the “applicable premium” for continuation coverage, i.e., generally the maximum permitted, the Reduced Premium equals 35% of the 102% of the applicable premium. As no good deed goes unpunished, however, if the premium the group health plan would charge the assistance eligible individual is less than the maximum allowable COBRA premium, the Reduced Premium will be 35% of that lesser amount.  In determining whether an assistance eligible individual has paid 35% of the premium, payments on behalf of the individual by another person (other than the employer with respect to which the involuntary termination occurred) are taken into account.

 

Coverage Eligible For Premium Reduction

Notice 2009-27 also provides guidance about what types of group health plan coverage qualifies for premium reduction.  According to the Notice, the premium reduction is available for COBRA Coverage of any group health plan, except a health flexible spending arrangement (FSA) under section 106(c) offered under a section 125 cafeteria plan. This includes vision-only or dental-only plans, “mini-med plans” and certain health reimbursement accounts (HRAs). 

The Notice 2009-27 distinguishes exempted FSAs from covered health reimbursement arrangements (HRAs) for purposes of these rules.  According to Notice 2009-27, while an HRA may qualify as an FSA under section 106(c), the exclusion of FSAs from the premium reduction is limited to FSAs provided through a section 125 cafeteria plan, which would not include an HRA. 

Notice 2009-27 also indicates that retiree coverage can qualify for the premium reduction where the retiree coverage does not differ from the coverage made available to similarly situated active employees.

 

Premium Reduction Period Duration

Notice 2009-27 also provides guidance about when periods of coverage and the Premium Reduction Period begin and end.  Under the Stimulus COBRA Rules, the premium reduction applies as of the first period of coverage beginning on or after February 17, 2009 (February 17, 2009)  for which the assistance eligible individual is eligible to pay only 35% of the premium  and be treated as having made full payment.   For this purpose, a period of coverage is a monthly or shorter period with respect to which premiums are charged by the plan with respect to such coverage.  

According to Notice 2009-27, when the Premium Reduction Period begins for an assistance eligible individual depends on the period the plan charges COBRA premiums.  Where a group health plan requires an individual who loses coverage other than on the last day of the month who wishes to enroll in COBRA Coverage to pay a pro-rata portion of the monthly premium, Notice 2009-27 states the first period of coverage to which the premium reduction applies for an assistance eligible individual who loses coverage after February 17, 2009 generally is the individual’s first partial month of coverage.  A different rule applies when the assistance eligible individual elects COBRA Coverage under the second election period required by the Stimulus Bill Rules, however.  Whether a plan requires COBRA Coverage be paid for based on a calendar month or pro rata basis, March 1, 2009 is the beginning of the first period of coverage within the Premium Reduction Period for any assistance eligible individual enrolling during the second enrollment period and the Reduced Premium only applies to that individual for COBRA Coverage from March 1, 2009 through the end of his otherwise applicable Premium Reduction Period.

 

End Of Premium Reduction Period

An assistance eligible individual ceases to qualify for the premium reduction on the earliest of:

ü       The first date the assistance eligible individual becomes eligible for other group health plan coverage (with certain exceptions) or Medicare coverage,

ü       The date that is nine months after the first day of the first month for which the Stimulus Bill premium reduction provisions apply to the individual, or

ü       The date the individual ceases to be eligible for COBRA Coverage.

Notice 2009-27 confirms that the Premium Reduction Period of an assistance eligible individual ends on the first date he becomes eligible for other group health plan coverage or Medicare effect even if the assistance eligible individual does not enroll in the other group health plan coverage.  

According to Notice 2009-27, whether an offer of retiree coverage that is not COBRA Coverage simultaneously with the offering of COBRA Coverage ends the Premium Reduction Period depends on whether the retiree coverage is offered under the same group health plan as the COBRA Coverage or under a different group health plan.  If offered under the same group health plan, the offer of the retiree coverage has no effect on the Premium Reduction Period.  If offered under a different group health plan, the offer of retiree coverage that is not COBRA coverage ends the Premium Reduction Period.  However Notice 2009-27, however, If offered to someone whose eligibility for COBRA coverage arose between September 1, 2008 and February 17, 2009, the offer render the individual ineligible for the premium reduction only if the period the individual is given for enrolling in the retiree coverage extends to at least February 17, 2009.

Notice 2009-27 also addresses when eligibility for coverage under an HRA ends eligibility for the premium reduction.  It states that becoming eligible for HRA coverage ends the Premium Reduction Period unless the HRA qualifies as an FSA under section 106(c).   Under section 106(c), an FSA is health coverage under which the maximum amount of reimbursement which is reasonably available to a participant of the coverage is less than 500% of the value of the coverage. For this purpose, the maximum amount of reimbursement which is reasonably available is generally the balance of the HRA and the value of the HRA coverage would generally be the applicable premium for COBRA continuation of the HRA coverage.

Notice 2009-27 also clarifies that the Premium Reduction Period of an eligible individual may extend beyond December 31, 2009 for individuals who qualify as assistance eligible individuals on or before December 31, 2009.  For example, the Premium Reduction Period of an assistance eligible individual whose Premium Reduction Period begins on December 1, 2009 could extent until August 31, 2010, assuming the individual does not become eligible for other group health plan coverage or Medicare or lose eligibility for COBRA Coverage before that date.

With regard to the effect of Medicare eligibility on an assistance eligible individual’s Premium reduction Period, Notice 2009-27 indicates that an individual currently enrolled in Medicare when the involuntary termination of employment occurs is ineligible for premium reduction, even though they may be eligible to elect COBRA continuation coverage by paying the otherwise applicable unreduced COBRA premium.

 

Dealing With Assistance Eligible Individuals Not Eligible For Premium Subsidy Based On Eligibility For Other Group Coverage

Under the Stimulus Bill, assistance eligible individuals are required to provide notification and resume paying the unreduced usual COBRA premium when they become eligible for Medicare or other group health coverage.  Where an assistance eligible individual fails to provide the required notice and continues to take advantage of the premium reduction after his Premium Reduction Period terminates due to his becoming eligible for other coverage or Medicare, Notice 2009-27 states the employer is not responsible for recovering the additional premium or otherwise recouping the COBRA premium. 

 

Dealing With Assistance Eligible Individuals Subject to Phase Out of Premium Subsidy Eligibility Based On Income

The Stimulus COBRA Rules include tax provisions designed phase out the COBRA Subsidy for certain highly compensated employees by taxing a portion of those amounts.  Notice 2009-7 discusses the mechanics through which highly compensated employees can avoid this tax liability by electing to waive the Premium Reduction and Premium Subsidy. 

An assistance eligible individual who wants to make a permanent election to waive the right to the premium reduction makes the election by providing a signed and dated notification (including a reference to “permanent waiver”) to the employer or other person who is reimbursed for the premium reduction under the COBRA Premium Subsidy provisions of Code § 6432. No separate additional notification to any government agency. If an assistance eligible individual makes the permanent election to waive the right to the premium reduction, the individual may not later reverse the election and may not receive the premium reduction for any future period of COBRA Coverage in 2009 or 2010, regardless of modified adjusted gross income in those years.

Notice 2009-27 makes clear that these rules don’t allow employers to deny the Reduced Premium to these assistance eligible individuals.  According to Notice 2009-27, “Even if an assistance eligible individual’s income is high enough that the recapture of the premium reduction would apply, COBRA Coverage must be provided upon payment of 35% of the premium unless the individual has notified the plan that the individual has elected the permanent waiver of the premium reduction (or the period for the premium reduction has ended).

 

Second COBRA Election Period

The Stimulus Bill also requires group health plans to offer a second election period to assistance eligible individuals not enrolled in COBRA Coverage on February 17, 2009 whose employment terminated between September 1, 2008 and February 16, 2009.  Notice 2009-27 confirms that any individual (including a dependent) who did not have an election of COBRA Coverage in effect on February 17, 2009, but who would have been an assistance eligible individual if the election were in effect must be offered this second election period. For those electing COBRA Coverage during this second election period, the resulting coverage begins with the first period of COBRA continuation coverage beginning on or after February 17, 2009.   Notice 2009-27 confirms that this extended election period is available for all individuals who are qualified beneficiaries as the result of an involuntary termination during the period from September 1, 2008, through February 17, 2009, even if they still have an open COBRA election period as of February 17, 2009. If these individuals elect COBRA under their original COBRA election period, COBRA coverage is retroactive to their loss of coverage and the premium reduction does not apply to the periods of coverage prior to the first period of coverage beginning on or after February 17, 2009 (generally, periods of coverage before March 2009 for plans with monthly coverage periods).

If, as a result of the extended election period, an assistance eligible individual becomes eligible for COBRA Coverage under a group health plan that requires payment of COBRA premiums on a calendar month basis, the individual’s first period of coverage will begin on March 1 and the Reduced Premium only applies prospectively from that date. According to Notice 2009-27, this does not change even if the plan otherwise requires individuals who lose coverage before the last day of the month and who wish to enroll in COBRA continuation coverage to pay a pro-rata portion of the monthly premium for the first partial month of coverage.

In contrast, where a group health plan determines the required COBRA premiums based on the loss of coverage, Notice 2009-27 states that the first period of coverage begins on the first day after the loss of coverage and ends on the day of the following month corresponding to the day of the loss of coverage. For example, if the last day of coverage was October 3, 2008, the period of coverage runs from the fourth of the month to the third of the following month, and thus the first period of coverage on or after February 17, 2009, is the period March 4, 2009, through April 3, 2009.

Notice 2009-27 also discusses the operation of these rules as applied to certain HRAs

 

Who Pays The Premium Subsidy & Claims The Payroll Tax Credit

In previously issued guidance, the IRS indicated that between the sponsoring employer or union and a group insurer, the party that collects the Reduced Premium bears responsibility to pay the 65% Premium Subsidy then claiming the payroll tax credit under the Stimulus COBRA Rules.  According to Notice 2009-27, if the insurer and the employer of insured, single employer group health plan have agreed that the insurer will collect the premiums directly from the qualified beneficiaries, the insurer must treat an assistance eligible individual paying 35 of the premium as having paid the full premium, even before the employer pays the insurer the remaining 65%. If the insurer fails to treat a 35% payment by an assistance eligible individual as a payment of the full premium, the insurer may be liable for the excise tax under Code § 4980B(e)(1)(B), which applies to persons responsible for administering or providing benefits under the plan and whose act or failure to act caused (in whole or in part) the failure, if the person assumed responsibility for the performance of the act to which the failure relates.

 

For More Information or Assistance

If your organization needs help responding to the COBRA Subsidy Rules or other group health plan or other employee benefit or human resources matters, please contact Cynthia Marcotte Stamer.  Ms. Stamer and other members of Curran Tomko and Tarski LLP are experienced with advising and assisting employers with these and other labor and employment, employee benefit, compensation, and internal controls matters. If your organization needs assistance with assessing, managing or defending its wage and hour or other labor and employment, compensation or benefit practices, please contact Ms. Stamer at e-mail, (214) 270-2402; or your favorite Curran Tomko Tarski, LLP attorney.  For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi, LLP team, see the Curran Tomko Tarski Website or Cynthia Marcotte Stamer, P.C. Website.

We hope that this information is useful to you. You can register to receive future updates and information about upcoming programs, access other publications by Ms. Stamer and access other helpful resources at CynthiaStamer.com For additional information about Ms. Stamer and her experience, see here or contact Ms. Stamer directly. If you or someone else you know would like to receive updates about developments on these and other human resources and employee benefits concerns, please be sure that we have your Currant contact information – including your preferred e-mail- by creating or updating your profile at CynthiaStamer.com.  If you would prefer not to receive these updates, please send a reply e-mail with “Remove” in the subject line to support@SolutionsLawyer.net. You also can register to participate in the distribution of these updates by registering to participate in the Solutions Law Press HR & Benefits Update Blog here.  For important information concerning this communication click here.

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Posted by Cynthia Marcotte Stamer

Tell Senate Committee Today Not To Mess Up Health Benefits

May 27, 2009

Today is the last day that individuals and businesses concerned about health care can provide feedback to Congress on health care reform proposals on the fast track for adoption by Congress and have their opinion included in the official hearing record of the  May 12, 2009 Senate Finance Committee Hearing on  “Financing Comprehensive Health Care Reform.”  Start speaking up today and keep speaking out until you are heard.

Senate health care reform leaders have announced their intention to have the Senate vote and pass health care reform legislation that would drastically change the U.S. health care and health insurance system during June. Individuals and businesses concerned about Congressional proposals to private health benefits with federal government benefits, to tax individuals and businesses on health benefits, and to make other radical changes in our health care programs should e-mail their concerns to Congress today.  Recent statements by Congressional leaders and President Obama indicate that the intend to act quickly to pass major health care reforms within the next few months, beginning with action by the Senate in June.

The Senate Finance Committee discussed the proposed changes during a “Roundtable Discussion” hearing on May 12, 2009.  Among the changes that this hearing reflects to be under serious consideration by Congress are proposals:

  • To tax individuals on health benefits and/or coverage
  • Reduce or eliminate employer tax benefits for providing health coverage
  • Mandate individuals and/or employees pay government mandated health insurance premiums
  • Replace existing employer and private health insurance programs with government run or mandated benefit programs
  • Involve the federal government  in deciding who and when Americans get care
  • Establish other burdensome federal requirements and regulations on health benefits and health care providers.

 You can review or listen to the testimony and learn more about what Congress plans to do to your and your employees’ health benefits here.

If you or others that you know are concerned about all or any of these proposals, we urge you to share your feedback TODAY as follows and staying involved as Congress moves to act: 

  • E-mail the Health Care Reform Leadership of the Senate Finance Committee at Health_reform@finance_dem.senate.gov
  • E-mail each member of the Senate Finance Committee at http://finance.senate.gov/sitepages/committee.htm
  • Call (202) 224-4515 and share your views with Congressional Staffers Erin Shields (Baucus) and Jill Gerber (Grassley), Committee on Finance, 219 Dirksen Senate Office Building, Washington, D.C. 20510-6200
  • Tell your Senators and Representatives you oppose Congressional plans to fast track health care reform the way Congress enacted the Stimulus Bill
  • Tell your Senators and Representatives you will support members of Congress who vote responsibly on health care reform
  • Tell your Senators and Representatives in Congress and political party leaders you will work to defeat members and candidates that advocate these and other irresponsible health care reform legisltation
  • Carry through on your promises
  • Keep speaking out until you are heard and Congress gets the message.    

Cynthia Marcotte Stamer is an attorney, author and health care advocate known for her work and writings nationally and internationally on health care and coverage policy and legal matters . If your organization needs assistance with assessing, managing or communicating its concerns about this legislation or other health care and insurance, employment or employee benefit practices, please contact Ms. Stamer at cstamer@cttlegal.com, (214) 270-2402; or your favorite Curran Tomko Tarski, LLP attorney.  For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi, LLP team, see the http://www.cttlegal.com.

Other Information & Resources

Cynthia Marcotte Stamer and other members of Curran Tomko and Tarski LLP are experienced with advising and assisting employers with these and other labor and employment, employee benefit, compensation, and internal controls matters. If your organization needs assistance with assessing, managing or defending its wage and hour or other labor and employment, compensation or benefit practices, please contact Ms. Stamer at e-mail, (214) 270-2402; or your favorite Curran Tomko Tarski, LLP attorney.  For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi, LLP team, see the Curran Tomko Tarski Website or Cynthia Marcotte Stamer, P.C. Website.

We hope that this information is useful to you. You can register to receive future updates and information about upcoming programs, access other publications by Ms. Stamer and access other helpful resources at CynthiaStamer.com For additional information about Ms. Stamer and her experience, see here or contact Ms. Stamer directly. If you or someone else you know would like to receive updates about developments on these and other human resources and employee benefits concerns, please be sure that we have your Currant contact information – including your preferred e-mail- by creating or updating your profile at CynthiaStamer.com.  If you would prefer not to receive these updates, please send a reply e-mail with “Remove” in the subject line to support@SolutionsLawyer.net. You also can register to participate in the distribution of these updates by registering to participate in the Solutions Law Press HR & Benefits Update Blog here.  For important information concerning this communication click here.    If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject to support@SolutionsLawyer.net.

 

©2009 Cynthia Marcotte Stamer.  Permission to forward with attribution granted to concerned parties.  All other rights reserved.

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Posted by Cynthia Marcotte Stamer

Most Employers, Plans Still Have Work To Do To Comply With Stimulus Bill COBRA Rules

May 14, 2009

Many employers have used the Model Notices posted March 19, 2009 by the Department of Labor (DOL) to meet the April 17, 2009 deadline to provide initial notification to employees and dependents whose group health coverage terminated as a result of an involuntary termination of employment between September 1, 2008 and February 17, 2009 under the temporary rules added to the group health plan medical coverage continuation requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) by the American Recovery and Reinvestment Act of 2009 (“Stimulus Bill”).  However, most employers including many distressed and reorganizing companies and their group health plan administrators, fiduciaries and insurers have additional work to do to complete the arrangements to comply with these new Stimulus Bill COBRA rules

Although many employers and group health plans have taken preliminary action to comply, most employers and group health plan insurers, administrators and fiduciaries have not fully completed the steps needed to complete compliance arrangements.  Among the companies sponsoring group health plans most likely to be behind in their compliance efforts are those in bankruptcy and distressed companies, where internal human resources and employee benefit staff and outside vendor relationships are likely to be reduced, overextended, or otherwise distracted.

In some instances, parties responsible for sending notifications and making other compliance arrangements have not begun to comply.  More typically, however, employers sponsoring group health plans, their administrators, insurers or fiduciaries may mistakenly believe that preliminary compliance efforts fulfilled their compliance responsibilities.  As a result, many have failed to complete all of the steps necessary to comply.  For instance:

  • Many employers, health plan fiduciaries and administrators have not formally amended their group health plans, updated their COBRA initital notifications and summary plan descriptions, implemented required procedures and finished other arrangements necessary to bring their group health plans into compliance with the Stimulus Bill COBRA requirements.  
  • Many employers, insurers, administrators and fiduciaries  who used the Model Notices initially to provide required notices are finding additional refinements to their notices and procedures to reduce questions and confusion by recipients attributable to poor tailoring of the information to their particular plan design. 
  • Many employers who outsource the collection of COBRA premiums or other aspects of COBRA administration will want to revise Model Notice language to avoid unnecessarily undermining previously negotiated allocations of fiduciary responsibility to those third parties for responsibilities outsourced.

Employers, health plan administrators, and health insurers involved in the sponsorship or administration of COBRA-covered group health plans should consult with counsel about the suitability of using the Model Notices to provide required notifications of the new Stimulus Bill COBRA rules and other steps necessary to comply with the new requirements.  Compliance with the Stimulus Bill COBRA rules is mandatory for all COBRA-covered group health plans and certain other arrangements including group health plans sponsored by businesses in bankruptcy where the entity or a commonly controlled or affiliated entity continues to maintain a group health plan.

Stimulus Bill COBRA Rule Basics

The Stimulus Bill provisions that took effect on February 17, 2009 require special COBRA treatment for “assistance eligible individuals.” See “Stimulus Bill COBRA Amendments Require Immediate Group Health Plan Action” for more information. The Stimulus Bill COBRA amendments are intended to help certain involuntarily terminated former employees and their dependents maintain COBRA coverage.  Employers must amend their plans to comply with these mandates and, if they wish to seek reimbursement for COBRA Subsidies, must comply with IRS requirements. Meanwhile, group health plan administrators and insurers must take immediate action to provide required notifications and implement other administrative changes necessary to comply with the new rules.

The Stimulus Bill definition of “assistance eligible individual” generally includes any COBRA “qualified beneficiary” who meets all of the following requirements:

  • Is eligible for COBRA continuation coverage at any time during the period beginning September 1, 2008 and ending December 31, 2009;
  • Elects COBRA coverage (when first offered or during the additional election period): and
  • Has a qualifying event for COBRA coverage that is the employee’s involuntary termination during the period beginning September 1, 2008 and ending December 31, 2009.

This definition includes both involuntarily terminated employees and their dependents who lost coverage under a group health plan due to the involuntary termination. 

As part of their COBRA amendments, the Stimulus Bill limits the COBRA premium that a COBRA-covered group health plan can charge an “assistance eligible individual” to 35% of the otherwise applicable COBRA premium for a period of up to 9 months (the “Subsidy Period”) beginning March 1, 2009.  Employers sponsoring these group health plans must pay the remaining 65% of the COBRA premium (the “COBRA Subsidy”) for the assistance eligible individual during the Subsidy Period.  However, the Stimulus Bill allows an employer to seek reimbursement by claiming a payroll tax credit for these COBRA Subsidy payments by complying with applicable IRS procedures.  

The Stimulus Bill also requires certain assistance eligible individuals whose employment terminated between September 1, 2008 and February 16, 2009 and did not elect COBRA coverage when previously offered or who allowed COBRA coverage to lapse after electing that coverage be offered a second COBRA enrollment period in which to elect prospectively to enroll in COBRA coverage.  It also requires that group health plans that offer employees different plan options allow assistance eligible individuals the option to change their coverage choice.  Also Group health plan administrators must provide certain notifications to assistance eligible individuals concerning these changes.

March 19, 2009 & Other Piecemeal Guidance

The March 19, 2009 DOL Guidance containing the Model Notices is part of a series of interim and evolving guidance separately issued by the IRS and DOL between February and April.  The March 19, 2009 DOL Guidance includes:

  • Various  Model Notices
  •  New FAQs for Employers on the COBRA Premium Reduction
  •  Expanded FAQs for Employees on the COBRA Premium Reduction
  •  Updated FAQs for Employees on General COBRA Provisions

In addition to the March 19, 2009 Guidance, the DOL and IRS previous also had issued a series of other guidance relating to the implementation and application of the Stimulus Bill COBRA rules on a piecemeal basis.  These include separately issued IRS guidance detailing the documentation and procedures that the IRS has indicated that employers or others who collect discounted COBRA premiums from Stimulus Bill assistance eligible individuals must meet in order to comply with the COBRA Stimulus Bill mandates and to recover additional amounts that the employer pays as a COBRA premium subsidy on behalf of assistance eligible individuals through the payroll tax credit provisions of the Stimulus Bill COBRA rules.  You can review:

While the Model Notices and other guidance provides helpful insights about the new requirements, many group health plan sponsors, administrators and fiduciaries are likely to find it necessary or desirable to specifically tailor the notifications and other procedures they provide to more clearly communicate the workings of the new requirements as they relate to their specific plans so as to minimize administrative burdens of compliance and fiduciary risks.

More Resources, Information & Assistance

Curran Tomko Tarski LLP Partner Cynthia Marcotte Stamer consults with clients and writes and speaks extensively about COBRA and other group health plan matters.  Author of the “Health Care Eligibility Toolkit” and nationally known for her experience on COBRA matters, her  Solutions Law Press article discussing the highlights of these IRS requirements and other previous guidance at http://www.cynthiastamer.com/documents/alerts/20090303_NEW%20IRS%20&%20DOL%20Guidance%20On%20Stimulus%20Bill%20COBRA%20Relief.pdf  is just one of many helpful publications she has written on the Stimulus Bill COBRA Rules and other related matters. The Stimulus Bill COBRA rules were among the updates discussed by Cynthia Marcotte Stamer during a March 11, 2009 Health Plan Update Teleconference she presented for Solutions Law Press. 

If you are an employer or other group health plan sponsor, administrator, insurer or fiduciary and need assistance in preparing required notifications or with other matters relating to the Stimulus Bill COBRA Rules or any other health or other employee benefits matter, contact Cynthia Marcotte Stamer at CStamer@SolutionsLawyer.net or via telephone at 972.419.7188. For information about how to purchase a recording of this teleconference or to review other breaking news updates about these Stimulus Bill COBRA Rules, e-mail CStamer@cttlegal.com.

You also can register to receive these and other updates by registering for this blog or by registering to receive other helpful Curran Tomko Tarski LLP publications at CTTLegal.com.

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Posted by Cynthia Marcotte Stamer

Mitigating Workplace Fallout of Pandemic Response

May 5, 2009

As the U.S. rushes to try to contain the spread of the swine influenza A (H1N1) virus infection (swine flu), businesses increasingly are facing employee leave requests and other employment and operational disruptions plans caused by school, day care or other closures and other business disruptions resulting from efforts to contain the disease while also working to take appropriate steps to prevent the spread of the disease within their own organizations.

Regardless of how deadly it ultimately proves to be, the pandemic proportion of the swine flu outbreak now ensures that most U.S. businesses will experience some disruption in operations as a result of the epidemic and efforts to contain it.

According to officials from the Centers for Disease Control and Prevention (CDC), as of 11:00 a.m. Eastern Time, 36 states had reported a total of 236 confirmed cases of swine flu and more cases are expected. That number includes the first U.S. swine flu fatality: a 22-month-old child from Mexico who died of the illness at a Houston, Texas hospital while visiting the United States last week. States currently hardest hit include New York (73 cases), Texas (41 cases), California (30 cases), Delaware (20 cases) and Arizona (17 cases). In the near future, however, CDC officials anticipate confirmed cases in all 50 states.

CDC officials and other experts continue to emphasize that the success of efforts to prevent the unnecessary spread of the disease depends largely on good health habits, limiting exposure to the virus and prompt diagnosis and treatment of afflicted persons. Employers can help reduce the risk that members of their workforce and their families will catch the virus by promoting good health habits and encouraging workers and their families to stay home and seek prompt treatment in the event of an illness. Simultaneously planning for and dealing with absences and other staffing challenges result from school, day care and other closings prevents a greater challenge for many employers, however.

Easy Preventive Safeguards

While the CDC says getting employees and their families to get a flu shot remains the best defense against a flu outbreak, it also says getting employees and family members to consistently practice good health habits like covering a cough and washing hands also is another important key to prevent the spread of germs and prevent the spread of respiratory illnesses like the flu. To help promote health habits within their workforce, many businesses may want to download and circulate to employees and families the free resources published by the CDC at http://www.cdc.gov/flu/protect/habits.htm. These and other resources make clear that Employers should encourage employees and their families to practice good health habits by telling employees and their families to take the following steps:

  • Avoid close contact with people who are sick. When you are sick, keep your distance from others to protect them from getting sick too.
  • Stay home when you are sick to help prevent others from catching your illness. Cover your mouth and nose.
  • Cover your mouth and nose with a tissue when coughing or sneezing. It may prevent those around you from getting sick.
  • Clean your hands to protect yourself from germs.
  • Avoid touching your eyes, nose or mouth.
  • Germs are often spread when a person touches something that is contaminated with germs and then touches his or her eyes, nose, or mouth.
  • Practice other good health habits. Get plenty of sleep, be physically active, manage your stress, drink plenty of fluids, and eat nutritious food.

Many businesses are promoting these and other conducts that help prevent the spread of disease by sharing educational materials such as the growing range of free materials provided by the CDC and others available at the government sponsored website, http://www.pandemicflu.gov. For instance, business can access and download free copies of the following publications at http://www.cdc.gov/flu/protect/habits.htm:

  • Cover Your Cough
  • Be a Germ Stopper: Healthy Habits Keep You Well
  • Flu Prevention Toolkit: Real People. Real Solutions
  • Stopping the Spread of Germs at Home, Work & School

Dealing With Lost Time & Productivity Challenges

Businesses also should begin preparing backup staffing and production strategies to prepare for disruptions likely to result if a significant outbreak occurs. Whether or not the disease afflicts any of its workers, businesses can anticipate the swine flu outbreak will impact their operations -either as a result of occurrences affecting their own or other businesses or from workflow disruptions resulting from safeguards that the business or other businesses implement to minimize swine flu risks for its workforce or its customers.

For many employers, however, planning for and dealing with requests for time off or other workplace disruptions resulting from pandemic containment efforts presents special challenges. While most employers have well established policies and procedures for providing medical leave to employees during periods of their own or a family member’s illness under the Family & Medical Leave Act (FMLA) or otherwise, many employers are experiencing difficulty in responding to leave requests of healthy employees necessitated by school or day care closings, suspected exposures, or other pandemic response disruptions.

Certainly, whether or not legally mandated, the CDC and other official advisories make clear that sick employees should not be in the workplace. Employers of course must provide medical leave as required by the FMLA or other similar state laws as well as any contractually agreed to leave. To better insulate their workforce against potential exposure to the virus, however, many employers also may wish consider temporarily modifying existing leave or other work policies with an eye to better defending their workforce against a major outbreak. In this respect, employers need to consider both how to respond to the present wave of the virus and to plan for the possible need to respond to another potentially stronger outbreak of the swine flu virus that the CDC and other experts caution likely may arise in the Fall or Winter.

As part of their efforts to insulate their workplaces against exposure to the virus, employers generally should discourage workers from coming to work if they or a family member are experiencing symptoms or have been exposed to the virus. For this reason, businesses generally evaluate workplace policies or practices that may pressure or encourage employees with swine flu or any other contagious disease to report to work. Employers should consider whether the potential risks make advisable adjustments to their current attendance, telecommuting, leave and paid time off and other policies.

In light of the current situation, many businesses may want to consider temporarily adjust their leave, telecommuting and other policies in light of the impending health risk. For instance, recognizing that the decision to close a school or child care facility in response to a known or suspected infection seeks to minimize the spread of the disease through exposure to other then undiagnosed cases, businesses generally should think twice about allowing employees to bring these potentially exposed children into the workplace. Instead, employers may wish to consider being more flexible in allowing employees to work from home or take leave to care for children whose schools or child care facilities are closed due to concerns about possible exposure to reduce the risk of creating unnecessary exposure in their workplace.

To help minimize financial pressures on workers to report to work when they may be ill or exposed to the virus, many employers also may want to consider providing or offering short-term disability insurance, expanding the availability of paid or unpaid leave or both.

Regardless of the specific choices a particular business makes, businesses need to take appropriate steps to document, implement, and communicate their decisions. If considering allowing or requiring employees to work from home, employers need to implement appropriate safeguards to monitor and manage employee performance, and to protect the employer’s ability to comply with applicable wage and hour, worker’s compensation, safety, privacy and other legal and operational requirements. They also should review and update family and medical leave act and other sick leave policies, group health plan medical coverage continuation rules and notices and other associated policies and plans for compliance with existing regulatory requirements, which have been subject to a range of statutory and regulatory amendments in recent years.

If considering allowing or requiring employees to work from home, for instance, employers need to implement appropriate safeguards to monitor and manage employee performance, and to protect the employer’s ability to comply with applicable wage and hour, worker’s compensation, safety, privacy and other legal and operational requirements. They also should review and update family and medical leave act and other sick leave policies, group health plan medical coverage continuation rules and notices and other associated policies and plans for compliance with existing regulatory requirements, which have been subject to a range of statutory and regulatory amendments in recent years.

In light of the growing responsibilities and exposures of business to medical privacy and disability liabilities associated with knowledge, collection, protection and use of information about the health and medical conditions of workers and their families, businesses also should review and update their procedures regarding the use, collection, disclosure, and protection of this and other sensitive information. Businesses, health care providers, schools, government agencies and others concerned about preparing to cope with pandemic or other infectious disease challenges also may want to review the publication “Planning for the Pandemic” authored by Curran Tomko Tarski LLP partner Cynthia Marcotte Stamer available at http://www.cynthiastamer.com/documents/speeches/20070530%20Pan%20Flu%20Workplace%20Privacy%20Issues%20Final%20Merged.pdf. Schools, health care organizations, restaurants and other businesses whose operations involve significant interaction with the public also may need to take special precautions. These and other businesses may want to consult the special resources posted at http://www.pandemicflu.gov/health/index.html.

Cynthia Marcotte Stamer and other members of Curran Tomko and Tarski LLP are experienced with advising and assisting employers with these and other labor and employment, employee benefit, compensation, and internal controls matters. Ms. Stamer in particular has worked extensively with health care providers, government officials, and businesses to plan for and deal with pandemic and other absence, disease management and disaster preparedness concerns. If your organization needs assistance with assessing, managing or defending its wage and hour or other labor and employment, compensation or benefit practices, please contact Ms. Stamer at cstamer@cttlegal.com, (214) 270-2402, or your favorite Curran Tomko Tarski, LLP attorney. For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi, LLP team, see the http://www.cttlegal.com.

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Posted by Cynthia Marcotte Stamer

IRS Gives Underfunded Multiemployer Defined Benefit Plans More Time to Make WRERA Elections

May 2, 2009

On March 27, 2009, the Internal Revenue Service issued Notice 2009-31, 2009-16 I.R.B. 856, providing guidance to multiemployer defined plans making elections described in sections 204 and 205 of the Worker, Retiree, and Employer Recovery Act of 2008, P.L. 110-458 (WRERA).  These elections relate to provisions of Section 432 of the Internal Revenue Code (Code) by the Pension Protection Act of 2006, P.L. 109-280 (PPA) that impose requirements on multiemployer defined benefit plans that are significantly underfunded.  

Notice 2009-42 to be published at I.R.B. 2009-20 on May 18, 2009, extends the time period for making elections described in section 204 of the WRERA. In addition, if (1) as of the otherwise applicable deadline (i.e., the deadline for a plan as modified by this notice) for making an election under section 204 or 205, a plan sponsor has been unable to reach agreement as to whether to make the election, so that the decision must be resolved through an arbitration process; (2) the plan sponsor makes an election by the otherwise applicable deadline that is contingent on the resolution of the arbitration; and (3) the resolution is to not make an election, then the IRS will automatically approve a request to revoke the election.

Cynthia Marcotte Stamer and other members of Curren Tomko and Tarski LLP are experienced with advising and assisting employers with these and other labor and employment, employee benefit, compensation, and internal controls matters. If your organization needs assistance with assessing, managing or defending its wage and hour or other labor and employment, compensation or benefit practices, please contact Ms. Stamer at e-mail, (214) 270-2402; or your favorite Curren Tomko Tarski, LLP attorney.  For additional information about the experience and services of Ms. Stamer and other members of the Curren Tomko Tarksi, LLP team, see the Curren Tomko Tarski Website or Cynthia Marcotte Stamer, P.C. Website.

More Information

We hope that this information is useful to you. You can register to receive future updates and information about upcoming programs, access other publications by Ms. Stamer and access other helpful resources at CynthiaStamer.com For additional information about Ms. Stamer and her experience, see here or contact Ms. Stamer directly. If you or someone else you know would like to receive updates about developments on these and other human resources and employee benefits concerns, please be sure that we have your current contact information – including your preferred e-mail- by creating or updating your profile at CynthiaStamer.com.  If you would prefer not to receive these updates, please send a reply e-mail with “Remove” in the subject line to support@SolutionsLawyer.net. You also can register to participate in the distribution of these updates by registering to participate in the Solutions Law Press HR & Benefits Update Blog here.

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Posted by Cynthia Marcotte Stamer

COBRA Premium Reduction and Extended Eligibility Provisions in the American Recovery and Reinvestment Act of 2009

May 2, 2009

The U.S. Department of Labor (“DOL”) today (May 1, 2009) continued its efforts to increase awareness of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) provisions in the American Recovery and Reinvestment Act of 2009 (“ARRA”) by sharing information with state agencies and asking their assistance in helping dislocated workers, businesses, and partners in understanding the new law.

Under ARRA, employees involuntarily terminated between September 1, 2008 and December 31, 2009 and their dependents may be able to qualify for a 65% discount in the required premium they must pay to maintain COBRA coverage under their former employer’s group health plan for up to 9 months.  Special rules also apply to former employees who qualify for Trade Adjustment Assistance or affected by certain Pension Benefit Guarantee Corporation insurance programs.

Employers must pay the remaining amount of the otherwise required COBRA premium, but can request reimbursement from the Internal Revenue Service by filing for a payroll tax credit under the provisions of ARRA. 

Group health plans were required to begin complying with the new ARRA rules beginning February 17, 2009 and to notify workers of the new rules no later than April 18, 2009.  Many employers and their group health plan sponsors are still working to complete the necessary arrangements to comply with these new requirements.

The communication of information about the new provisions by the DOL, group health plans, employers and the media have prompted an outpouring of questions from many employees and their dependents, confused about their eligibility for the ARRA COBRA Subsidy and its workings.

In Training And Employment Notice No. 42-08, which is addressed to state workforce agencies, labor commissioners and other state workforce regulators, the Employment and Training Administration (“ETA”):

  •  Shared certain basic information about ARRA’s COBRA, Trade Adjustment Assistance and other workforce assistance relief;
  • Detailed some of the training and other resources provided by the DOL to help States and their citizens understand these new provisions and the procedures for their use; and
  • Asked the regulators to assist in communicating and disseminating the information to individuals who might qualify for benefits and other interested parties.

Interested persons can review the announcement at http://wdr.doleta.gov/directives/attach/TEN/ten2008/TEN42-08acc.pdf.

Cynthia Marcotte Stamer is nationally known for her knowledge and experience on COBRA and other health benefit and employee benefit matters,.  You will find several of these previous publications on the new ARRA COBRA provisions on prior editions of the Solutions Law Press HR & Benefits Update.  You also can access some of the many practical updates that she has prepared on these and other COBRA matters by e-mailing or contacting her.  She and other members of Curren Tomko and Tarski LLP are experienced with advising and assisting employers with these and other labor and employment, employee benefit, compensation, and internal controls matters. If your organization needs assistance with assessing, managing or defending its COBRA or other employee benefit or human resources practices, please contact Ms. Stamer at cstamer@cttlegal.com, (214) 270-2402 or your favorite Curren Tomko Tarski, LLP attorney. 

For additional information about the experience and services of Ms. Stamer and other members of the Curren Tomko Tarksi, LLP team, see the http://www.cttlegal.com.

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Posted by Cynthia Marcotte Stamer

Tips For Employers to Prepare for Possible Swine Flu Outbreak As 1st U.S. Death Reported

April 29, 2009

With U.S. officials confirming the first swine flu attributed death in the U.S. today and warning Americans to take precautions to guard against a likely swine flu pandemic, U.S. employers are asking what steps they should take to defend their organization and its people against the risk of a widespread outbreak among members of their workforce and the attendant lost time, health and disability costs, OSHA and other liability exposures and other personal and financial consequences likely to result from an outbreak.

 

Whether or not the swine flu outbreak reaches the level of an official pandemic, official reports reflect a legitimate need for concern.  According to officials from the Centers for Disease Control and Prevention, victims of the virus already have been reported in 10 states, and the number of people known to be infected with the 2009 H1N1 influenza strain grew to 91 in the U.S. as of Wednesday. That number includes the first U.S. swine flu fatality: a 22-month-old child from Mexico who died of the illness Monday at a Houston, Texas hospital while visiting the United States. While swine flu victims have been reported in more than 11 countries, the majority of the incidents of the disease and deaths as of Wednesday morning had occurred in Mexico.

 

While the CDC says getting employees and their families to get a flu shot remains the best defense against a flu outbreak, it also says getting employees and family members to consistently practice good health habits like covering a cough and washing hands also is another important key to prevent the spread of germs and prevent the spread of respiratory illnesses like the flu.  Employers should encourage employees and their families to take the following steps: 

 

  • Avoid close contact with people who are sick. When you are sick, keep your distance from others to protect them from getting sick too.
  • Stay home when you are sick to help prevent others from catching your illness.  Cover your mouth and nose.
  • Cover your mouth and nose with a tissue when coughing or sneezing. It may prevent those around you from getting sick.
  • Clean your hands to protect yourself from germs.
  • Avoid touching your eyes, nose or mouth.
  • Germs are often spread when a person touches something that is contaminated with germs and then touches his or her eyes, nose, or mouth.
  • Practice other good health habits.  Get plenty of sleep, be physically active, manage your stress, drink plenty of fluids, and eat nutritious food.

 

Employers also should be sensitive to workplace policies or practices that may pressure employees with a contagious disease to report to work despite an illness and consider whether the employer should adjust these policies temporarily or permanently in light of the impending health risk.  For instance, financial pressures and the design and enforcement of policies regarding working from home and/or qualifying for paid or unpaid time off significantly impact the decisions employees make about whether to come to work when first experiencing symptoms of illness.  Employers of workers who travel extensively – may wish to delay or restrict travel for some period. 

 

Many employers may want to evaluate and appropriately revise existing policies with an eye to better defending their workforce against a major outbreak.  If considering allowing or requiring employees to work from home, employers need to implement appropriate safeguards to monitor and manage employee performance, and to protect the employer’s ability to comply with applicable wage and hour, worker’s compensation, safety, privacy and other legal and operational requirements.  They also should review and update family and medical leave act and other sick leave policies, group health plan medical coverage continuation rules and notices and other associated policies and plans for compliance with existing regulatory requirements, which have been subject to a range of statutory and regulatory amendments in recent years. 

 

To help promote health habits within their workforce, many businesses may want to download and circulate to employees and families the free resources published by the CDC at http://www.cdc.gov/flu/protect/habits.htm.  Businesses and other concerned parties also can track governmental reports about the swine flu and other pandemic concerns at http://www.pandemicflu.gov/index.html. 

 

Businesses also should begin preparing backup staffing and production strategies to prepare for disruptions likely to result if a significant outbreak occurs.  Employers also should be sensitive to workplace policies or practices that may pressure employees with a contagious disease to report to work despite an illness and consider whether the employer should adjust these policies temporarily or permanently in light of the impending health risk.  For instance, financial pressures and the design and enforcement of policies regarding working from home and/or qualifying for paid or unpaid time off significantly impact the decisions employees make about whether to come to work when first experiencing symptoms of illness.  Many employers may want to evaluate and appropriately revise existing policies with an eye to better defending their workforce against a major outbreak. 

 

If considering allowing or requiring employees to work from home, employers need to implement appropriate safeguards to monitor and manage employee performance, and to protect the employer’s ability to comply with applicable wage and hour, worker’s compensation, safety, privacy and other legal and operational requirements.  They also should review and update family and medical leave act and other sick leave policies, group health plan medical coverage continuation rules and notices and other associated policies and plans for compliance with existing regulatory requirements, which have been subject to a range of statutory and regulatory amendments in recent years. 

 

Employers should begin preparing backup staffing and production strategies to prepare for disruptions likely to result if a significant outbreak occurs.  Whether or not the disease afflicts any of its workers, businesses can anticipate the swine flu outbreak will impact their operations -either as a result of occurrences affecting their own or other businesses or from workflow disruptions resulting from safeguards that the business or other businesses implement to minimize swine flu risks for its workforce or its customers.

 

Businesses, health care providers, schools, government agencies and others concerned about preparing to cope with pandemic or other infectious disease challenges also may want to review the publication “Planning for the Pandemic” authored by Curran Tomko Tarski LLP partner Cynthia Marcotte Stamer available at http://www.cynthiastamer.com/documents/speeches/20070530%20Pan%20Flu%20Workplace%20Privacy%20Issues%20Final%20Merged.pdf.  Schools, health care organizations, restaurants and other businesses whose operations involve significant interaction with the public also may need to take special precautions.  These and other businesses may want to consult the special resources posted at  http://www.pandemicflu.gov/health/index.html. 

 

Cynthia Marcotte Stamer and other members of Curran Tomko and Tarski LLP are experienced with advising and assisting employers with these and other labor and employment, employee benefit, compensation, and internal controls matters.  Ms. Stamer in particular has worked extensively with health care providers, government officials, and businesses to plan for and deal with pandemic and other disease management and disaster preparedness concerns.  If your organization needs assistance with assessing, managing or defending its wage and hour or other labor and employment, compensation or benefit practices, please contact Ms. Stamer at cstamer@cttlegal.com, (214) 270-2402, or your favorite Curran Tomko Tarski, LLP attorney.  For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi, LLP team, see the www.cttlegal.com.

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Posted by Cynthia Marcotte Stamer

New IRS’ 2009 “Dirty Dozen” Tax Scams List Invites Whistleblower Claims Against Employers, Others Engaged In Listed Transactions

April 14, 2009

The release yesterday (April 13, 2009) by the Internal Revenue Service of its 2009 “Dirty Dozen” Tax Scams List reminds businesses of the need to act to minimize exposures to tax related whistleblower or other retaliation claims by employees and other service providers that allege the potential involvement of the business in tax scams or other improper tax transactions.

 

Businesses face whistleblower, tax fraud prosecution, additional tax and penalty liability and other sanctions for involvement in tax shelters or other tax schemes.  Employees and other service provider reports to the Internal Revenue Service (IRS) are the leading means through which the IRS identifies and proves fraudulent tax activities.

 

Yesterday’s IRS announcement of its 2009 “dirty dozen” list of tax scams heightens whistleblower risks for businesses by encouraging employees and others who may have knowledge of a business or other taxpayer’s involvement in these or other prohibited tax practices to report their suspicions to the IRS and sharing instructions on how to report suspected tax fraud to the IRS as a whistleblower.  As part of these instructions, the announcement notes that “[w]histleblowers also may provide allegations of fraud to the IRS and may be eligible for a reward.”

 

The 2009 “dirty dozen” list of tax scams warns businesses about getting involved in 12 tax transactions that the IRS views as likely to create tax fraud and whistleblower risks. The tax schemes that made the 2009 Dirty Dozen List include:

  • Hiding Income Offshore
  • Filing False or Misleading Forms
  • Abuse of Charitable Organizations and Deductions
  • Return Preparer Fraud
  • Making Frivolous Arguments 
  • Making False Claims for Refund and Requests for Abatement
  • Abusive Retirement Plans
  • Disguised Corporate Ownership
  • Zero Wages
  • Misuse of Trusts
  • Fuel Tax Credit Scams

Taxpayers participating in the 2009 Dirty Dozen Tax Scams and other tax transactions listed as tax scams by the IRS risk exposure to additional taxes and penalties, prosecution for tax fraud, and potential whistleblower claims.  The Dirty Dozen list singles out for special attention some of the many tax transactions that the IRS views as tax shelters or tax fraud.  Depending on the nature of a business and its tax and compensation activities, businesses also may need to be concerned about scrutiny by the IRS for involvement in various other types of transactions that the IRS has identified as suspect. The IRS is urging U.S. businesses and other taxpayers to avoid participation in these common schemes.

 

Businesses engaged or accused of engaging in these or other transactions listed as tax scams or tax shelters by the IRS should exercise caution to confirm the appropriateness of the proposed transaction, to document their investigation of allegations of improper tax activities.  For profit and non-profit businesses should include appropriate tax compliance oversight in their internal controls and federal sentencing guideline compliance programs.  Businesses should review their activities in light of lists of IRS abusive transactions, should evaluate whether any of their transactions may be subject to scrutiny by the IRS, and take other appropriate steps to mitigate their exposure to prosecution for tax fraud, to tax related whistleblower liability and other risks.   Businesses also should exercise care when dealing with employees or service providers who make allegations that the business may be involved in improper tax activities.   Businesses also need to be prepared to demonstrate that they have not retaliated against individuals who report suspected tax fraud.  The best defense to retaliation claims is a consistent, well documented legitimate performance and discipline record.  Businesses should strengthen and consistently apply their employee performance and discipline processes to improve performance and deter whistleblower or other retaliation judgments.  As part of this process, businesses also should adopt and enforce policies requiring employees and other service providers to report suspected tax or other compliance concerns, administer documented processes for receiving and investigating allegations of potential fraud or other noncompliance, and should document their conclusions and any corrective actions in response to these investigations.

 

Cynthia Marcotte Stamer, and other members of Curren Tomko and Tarski LLP are experienced with assisting establish and administer employment, corporate compliance, internal and external fraud and other controls; to investigate potential fraud or other misconduct; to defend employment, whistleblower, Federal or state criminal or civil investigations, audits and prosecutions and to address other employment, employee benefits and corporate compliance matters.  If your organization needs assistance with assessing or managing its risk management and compliance responsibilities or liabilities under health care, employment, environmental, antitrust, securities or other federal or state laws, wishes to inquire about compliance audit or training or other services; or would like to review or engage and experience of Ms. Stamer, or other Curren Tomko Tarski LLP attorneys, please contact Ms. Stamer at cstamer@cttlegal.com, (214) 270-2402;  or see CTTLegal.com or CynthiaStamer.com.

More Information

We hope that this information is useful to you. You can register to receive future updates and information about upcoming programs, access other publications by Ms. Stamer and access other helpful resources at CynthiaStamer.com For additional information about Ms. Stamer and her experience, see http://cynthiastamer.com/human_resources.asp or contact Ms. Stamer directly. If you or someone else you know would like to receive updates about developments on these and other human resources and employee benefits concerns, please be sure that we have your current contact information – including your preferred e-mail- by creating or updating your profile at CynthiaStamer.com.  If you would prefer not to receive these updates, please send a reply e-mail with “Remove” in the subject line to support@SolutionsLawyer.net. You also can register to participate in the distribution of these updates by registering to participate in the Solutions Law Press HR & Benefits Update Blog at https://slphrbenefitsupdate.wordpress.com.

 

 

 

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Posted by Cynthia Marcotte Stamer

Subrogation Soup: The Law & Practicalities

April 7, 2009

Register Now

April 21, 2009 ABA JCEB Teleconference

1:00-2:30 pm ET / 12:00-1:30 pm CT / 11:00 am-12:30 pm MT / 10:00 am-11:30 am PT

 

Moderator:
Cynthia Marcotte Stamer, Curren Tomko Tarski LLP, Dallas, TX

Speakers:
James McKown, Recovery Data Connect, L.L.C., Leawood, KS
Scott Douglas Marquardt, Total Plan Services, Inc, Dallas, TX

 

Properly designed and administered subrogation provisions in ERISA-covered group health plans and group insurance contracts can provide invaluable tools for managing costs. Unfortunately, various legal and practical problems often prevent ERISA-covered group health plans and insurers from realizing many of these benefits. With health care costs continuing to rise, many health plan administrators, insurers and fiduciaries are placing renewed emphasis on the design and enforcement of their plan’s subrogation provisions. Listen and learn as a distinguished and experienced panel discusses the legal and practical ins and outs of the design, administration, and defense of effective group health plan policies and practices in ERISA-governed group health plans including:

 

ü       Legal Basis of Subrogation Under ERISA

ü       Why, When & When Not To Subrogate

ü       The Law

ü       The Process From Drafting, to Adjudication, to Recovery

ü       Who Gets Hired To Do What, Why & When

ü       Sticking Points & Plan Problems

ü       Practical Dos & Don’t

For more information or to register, go to http://meetings.abanet.org/meeting/jceb/JCEB042109.

 

If you have questions or concerns about the matters discussed in this publication or other human resources, employee benefits or compensation matters, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or publication, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 270-2402 or via e-mail to Cstamer@Solutionslawyer.net.

 

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Posted by Cynthia Marcotte Stamer

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