IRS releases detailed guidance on COBRA subsidies
April 17, 2009 by Jim GiulianoPosted in: COBRA, Employment law, Money, Special Report, Terminations
As employers look into the rules governing the new COBRA subsidies, more and more questions keep popping up. Here’s the IRS’s latest attempt to keep up with the inquiries.
This expands the information from our previous story “IRS defines ‘involuntary’ separation for COBRA.” It’s a lot of stuff, so here’s a summary of the info provided. You can use it to decide where to scroll down to your area of interest (or you might just want to print out the whole thing):
- The definition of involuntary and voluntary termination.
- Who are Assistance Eligible Individuals.
- How to calculate the premium reduction.
- Coverage that is eligible for premium reduction.
- The beginning and end of the premium reduction period.
- Recapture and waiver of premium subsidies.
- The extended election period.
- Payments to insurers under federal COBRA.
- How to determine when state continuation overage is comparable.
Read the full story by going here.
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April 17th, 2009 at 8:58 am
With respect to retirees, I thought that retirees were not entitled to continuation coverage per se if covered under a retirement plan unless the plan becomes embroiled in bankruptcy. COBRA 607(3)(C) and 603(6) and 602(2)(D)(ii). So unless the retiree is involuntarily terminated which was guised as retirement, no continuation coverage subsidy would come into play.
April 17th, 2009 at 11:01 am
[...] Following story continued from IRS releases detailed guidance on COBRA subsidies [...]
April 20th, 2009 at 12:59 pm
What constitues “gross misconduct” in which the terminated employee would not qualify for the subsidy
April 21st, 2009 at 1:49 pm
to Quin
Gross misconduct as i have heard it defined is when an employee does something trying to hurt the company. I can tell you that tardiness, absentees and poor performance do not count. They leave it vague on purpose so they can make a case by case judgment.
April 21st, 2009 at 1:58 pm
I was reading through the full article and noticed that if an employee has their hours reduced and then quits they are an AEI but if they have a reduction in hours but are later fired they are not an AEI.
How quickly must and employee quit to still be considered an AEI?
Can the ER fire some one immediately after a reduction in hours to avoid the hassle of COBRA subsidies? not that I would do that but it seems like some one will if they don’t define a time limit. it seems unfair to make an employee decide on the spot if the reduction in hours is reason enough for them to leave.
May 12th, 2009 at 1:57 pm
I agree with Keith, there are several issues that still need to be defined, what is a reasonable time to decide? I do have another question, and that is if an employer lays off an employee with possible recall, they qualify, but if the employer rehires that person down the road, but only on a part time basis, and that employee is not eligible for benefits, would they contiue to be eligible for the subsidy?? if I read the guidelines correct, if the employee found other employment regardless of who the company is, and they do not qualify for benefits (part time position), then they would continue to qualify for the subside until they either qualify with their employer, quality under spousal coverage, or they run out of the 9 months.
May 26th, 2009 at 2:00 pm
My question is about when an employee terminates for “good reason” is involuntary if the employer’s action resulted in material negative change in the employment relationship. What does that mean??? Material negative change?? is that like quitting if I get a reduction in pay or what?
June 18th, 2009 at 4:43 am
Here’s one I haven’t seen before and would like to know where to go to get this fixed:
I was hired by a company with a $10,000 signing bonus payable after 3 years. They paid full medical and dental for me and all their employees. They tried several things to make me quit as my three year date got closer like changing my hours, removing bonuses promised and downright ugly gossip about me to the other employees (who told me), but I loved my job and was looking forward to the bonus and had no intention of quitting, no matter what they did. Finally, after working for them for two years and 10 months, they fired me. But here’s the problem…just before they fired me, they converted my health insurance to “self-insured”, but they were still paying for most of it and now I had to pay for some of it deducted from my paycheck. Now that they’ve fired me, I asked the insurance company about COBRA and they told me that I’m not elligible because I’m “self-insured”. I think they converted my policy purposely so when they fired me they didn’t have to pay the 65% through COBRA. I can’t afford to pay my health insurance with my unemployment. Any suggestions as to where to start? (I can’t afford an attorney.)
Thanks so much!
June 18th, 2009 at 10:42 am
TC
I think the first place I would go would be your state DOL and see if they can hlep you get in contact with the Fed DOL. I am not sure how they could switch you to self insured. good luck
September 19th, 2009 at 3:10 pm
I was recently laid off, and qualify for the COBRA subsidy. Luckily, I have some opportunities to earn some income, but not in a capacity as a full time employee.
First, I have an opportunity to take a position as a temporary employee for a company – under which I would not qualify for benefits. Additionally, the company that laid me off is interested in hiring me as a consultant on a project-by-project basis. Likely to only equate to 10-15 hours a week or so, but it’s work. They are not looking for me to go back to an “employee” status, however. Because the consultant role would allow me to be flexible in my hours and there isn’t a conflict, technically I could do both.
As I understand it, if I just accept the temporary employee position I still qualify for both COBRA and the subsidy. But if I consult to my former employer (or anyone else), would I have to get a tax ID and become self employed? And would that jeopardize COBRA and the subsidy?