COMPLIANCE GALORE

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COMPLIANCE GALORE!

• Ouida Peterson
• Vice President CONEXIS
• 214-674-7647 Cell
• opeterson_at_conexis.com
• www.conexis.org

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COBRA A SIMPLE LAW

•  
• Eligible Participants
• Lose Coverage for Certain Reasons
• Continue for certain amount of time
• On a Self-Pay Basis

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COBRA is Risky Business

• How Many Years Have We Been Talking About COBRA?

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COMPLIANCE LIABILITY

• WHO HAS IT?

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COMPLIANCE LIABILITY

• EMPLOYER LIABILITY LAW!

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WHO IS EXEMPT

• FEDERAL GOVT
• Public Entities BUT . . .

• CHURCHES
• 414 (e) IRS code

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WHO MUST COMPLY

• 20 employees
• ½ typical work days in a calendar year

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WHO DO WE COUNT?
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PART-TIME FORMULA

• PART-TIME HOURS
  ?
• FULL-TIME HOURS
• ? ---- COUNT

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COMMON OWNERSHIP

• What else do you own?

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QUALIFIED BENEFICIARIES

• EFFECTIVE DAY BEFORE THE QE
• EMPLOYEE DEPENDENTS
• OWN RIGHTS

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Qualified Beneficiaries

• Qualified beneficiaries are
• Covered employee
• Covered LEGAL spouse
• Covered dependents and
• Child born to, or placed for adoption with, the
  covered employee during a period of COBRA
  coverage.
• Qualified Beneficiary Benefits
• OWN RIGHT to elect COBRA Continuation
• Eligible for 2nd Qualifying Events

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Qualified Beneficiaries

• FEDERAL LAW - Defense of Marriage Act
• In all Federal Programs and laws a legal spouse
  is partner of the opposite sex
• IMPACT ON COBRA
• Not a Qualified Beneficiary
• NON-QUALIFIED BENEFICIARY
• Coverage is tied to COBRA Participant
• Not Eligible for 2nd QE

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WORKING FAMILIES TAX RELIEF ACT

• Is a citizen or national of the U.S., Mexico,
  Canada, the Canal Zone, or the Republic of Panama
• Is a member of the household for the year -
  principal place of residence
• No local law is violated
• The Domestic Partner receives over half of
  his/her support for the year from their partner -
  includes food, shelter, clothing, medical and
  dental care, and education - Compare the amount
  of support provided to the Partners support from
  all sources, including his/her own sources of
  income such as salary
• Cannot be claimed as a dependent child by any
  taxpayer
• Does not have income in excess of the exemption
  amount of 3,200 for 2005. Social Security,
  income from a part-time job and investment income
  count toward the 3,200 maximum - 3600 in 2009

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COBRA COVERAGES

• An employer offers a Voluntary Payroll Deduct
  Dental plan. This coverage is
• A. NOT eligible for COBRA
• B. ELIGIBLE for COBRA
• C. ELIGIBLE only until the end of the calendar
  or benefit year, whichever is longer
•  

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COBRA COVERAGES

• HEALTH
• DENTAL
• VISION
• RX
• FSA
• EAP
• HRA

• TEST
• ANYONE PAY?
• TAKE IT WITH THEM?
• BENEFIT DIFFERENT?
• COST DIFFERENT?

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HOW MANY PLANS?

• One Plan Integrated
• Separate Plans
• Instruments governing an arrangement

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FSA AND COBRA

• Health Flexible Spending Account (Unreimbursed
  Medical Account)
• A. IS eligible for COBRA continuation
• B. is NOT eligible for COBRA continuation
• C. COBRA continuation is determined on an
  individual basis

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FSA

• Benefit - 600
• _at_ 50 a month
• March
• New glasses

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2001 FINAL Regs

• FSA COBRA based on the status of the account
  when the employee leaves
• benefit left available
• vs.
• amount left to contribute
• BENEFIT LESS no COBRA
• BENEFIT MORE Offer COBRA until the end of the
  current benefit plan year

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FSA and COBRA

• NEW PROPOSAL
• Eliminate use it or lose it
• COBRA IMPACT
• Eliminate FSAs???

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COBRA COMMUNICTIONS

• - COBRA General Notice
• - COBRA Election Notice
• - COBRA Ending Early notice
• - NOT ELIGIBLE for COBRA Notice

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GENERAL NOTICE

• Basics of COBRA Rights
• THE RULES
• Separation, Divorce, Child no longer meets
  eligible definition 60 days to notify employer or
  administrator

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A Little OLD A Little NEW

• GENERAL INFORMATION NOTICE
• WHO
• To each covered employee and spouse
• Any covered dependent not residing in the
  employees home

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A Little OLD A Little NEW

• GENERAL INFORMATION NOTICE
• WHEN
• OLD - Immediately When Coverage Commences (30
  days)
• CHANGING TO 90 DAYS of EFFECTIVE DATE

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STILL RULES OF THE GAME

• Procedures for Notifying Employer or
  Administrator of an Event
• WHO should receive notice?
• HOW it must be provided?
• WHAT must be in Notice?

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COBRA ENDING EARLY

• COBRA coverage being terminated before original
  end date
• Non-pay
• Gains NEW Coverage
• Group Coverage Canceling
• Any other reason

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NOT ELIGIBLE NOTICE

• Receives notice of a qualifying event from a
  participant or beneficiary not eligible to
  receive continuation coverage under the plan . . .

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PROVIDING THE NOTICE

• Certified Mail NO!
• Summary Plan Description
• Certificate of Mail
• PS Form 3817 3 letters
• PS Form 3877 log book
• Hand It To Them Not Best
• Employee OK ?
• What about dependents?
• Sign They Received It ?

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• WHAT HAVE THEY DONE TO MY COBRA?

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COBRA SUBSIDY

• American Economic Recovery and Reinvestment ACT
• Signed by President Obama on 2/17 (critical date)
• Allows eligible participants a new election and
  provides a 65 tax subsidy of their applicable
  premium subsidy available for all State
  Continuation and COBRA plans (no Health FSA
  through a cafeteria plan)

WHATS IN EMPLOYER PAID 65 tax subsidy Tax
Credit taken from PAYROLL taxes
WHATS OUT 55/10 extended coverage opportunity
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COBRA and STATE CONTINUATION

• Only for Assistance Eligible Individuals (AEI)
• Covered on Health Plan
• INVOLUNTARY Termination of Employment - 9-1-08 to
  12-31-09
• AND eligible for continuation during this time
• Special Extended Election Period for those who
  would be an AEI but are not on COBRA as of 2/17
  Another BITE at the COBRA Apple
• 65 Subsidy - FULL PREMIUM - Up to 9 months
• Optional Special Enrollment Period change plans
• Enactment date 2-17 (odd day Plans) or 3-1 (month
  to month plans)

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SPECIAL ENROLLMENT

• OPTIONAL FOR EMPLOYER
• Change coverage from that maintained on date of
  QE
• HMO to PPO 500 ded to 1500 ded . . .
• same or LOWER premium criteria
• 90 day election period
• Health ONLY not for stand alone dental or
  vision
• Each beneficiary a separate election option
• MORE PAPERWORK - 13 page COBRA notice
• COBRA Election
• Switching Benefits Option Form

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SUBSIDY ELIGIBILITY

• Who is an Assistance Eligible Individual?
• any COBRA qualified beneficiary
• Who is eligible for COBRA continuation by virtue
  of the covered employees involuntary termination
  of employment (for reasons other than gross
  misconduct)
• That occurs between September 1, 2008 and
  December 31, 2009 and
• who elects COBRA

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QUALIFIED BENFICIARY

• Qualified beneficiaries are
• Covered employee
• Covered LEGAL spouse (domestic partner
  Defense of Marriage and Working Family Relief Act
  criteria)
• Covered dependents and
• Child born to, or placed for adoption with, the
  covered employee during a period of COBRA
  coverage.
• Qualified Beneficiary Benefits
• OWN RIGHT to elect COBRA Continuation
• Eligible for 2nd Qualifying Events
• ELIGIBLE FOR THE TAX SUBSIDY

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COBRA SUBSIDY

• WHO did you say was eligible for the subsidy?
• ALL Qualified Beneficiaries!
• With or without the employee
• Non-qualified beneficiaries not independently
  eligible for the subsidy

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MAKE A LIST
ALL TERMINATIONS since 9-1-08
AEIs Status as of 2-17-09

• NON-AEIs

NOT on COBRA
ON COBRA
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NOTICE TO ALL - APPEALS PROCESS

• ALL terminated employees since 9-1-08
• If an employer denies an individuals request to
  be treated as eligible for the subsidy, the
  individual may appeal the decision to the DOL.
• The DOL must rule on the appeal within 15
  business days.
• If the appeal is denied, the individual may bring
  law suit under ERISA section 502(a)(3).
• Under the Act, a reviewing court is required to
  grant deference to the DOLs determination.

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TERMINATIONS SINCE 9-1-08 AEI status as of
2-17-09

• AEI but NOT on COBRA
• Never elected COBRA
• Elected COBRA and let it lapse
• Extended Election Period and Subsidy Eligible

AEI ON COBRA Eligible for the Subsidy
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SPECIAL EXTENDED ELECTION PERIOD

• If COBRA is elected as a result of the special
  election period, then. . .
• Coverage begins on first period of coverage on or
  after 2/17 (i.e. March 1)
• COBRA is measured as of original qualifying event
  date
• Gap in coverage prior to coverage start date is
  not considered a break in coverage for HIPAA
  pre-existing rules
• Certificate of coverage may need to be revised

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QUALIFYING EVENT 9-1-08 and 2-17-09

• Never elected COBRA
• Elected but, lost it (i.e. non-pay)
• NEW Election Opportunity
• 60 days from date of notice
• Coverage and Tax Subsidy effective March 1 (2-17
  if odd day CXN Plan)
• Maximum COBRA period calculated from original
  event
• Gap not a HIPAA break

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EXAMPLE

• Andrew was involuntarily terminated from
  employment 9-1-08 loses health, dental, vision
  coverage 9-30-08 COBRA notice sent but, he
  never elected COBRA
• ARRA allows Another Election Opportunity
• Andrew elects on 4-16-09 health, dental, vision
• 45 days to pay the initial payment
• - Coverage is effective 3-1-09
• - Tax Subsidy for health, dental and vision
• - COBRA calculated from original event date -
  10-1-08

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SUBSIDY for WHAT PLANS

• COBRA required under ERISA, the IRC, PHSA and any
  comparable state program
• Includes
• Medical
• Dental Voluntary Payroll Deduct
• Vision COBRA Plans ??
• EAP
• HRA
• Does NOT include Health Flexible Spending Account
  offered under a cafeteria plan

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EXAMPLE - PLUS

• Andrew was covering his wife and child on the
  active coverage. He is involuntarily terminated
  from employment 9-1-08 loses coverage 9-30-08
• COBRA notice sent but,
• ONLY ELECTED COBRA FOR THE CHILD
• ARRA allows Another Election Opportunity
• Andrew and spouse are AEIs - elects on 4-16-09
• Coverage is effective 3-1-09
• Tax Subsidy for Employee, Spouse and child
• COBRA calculated from original event date -
  10-1-08

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DURATION OF THE SUBSIDY

• Earlier of
• 9 months from first day of first month that
  Subsidy
• The date that the AEI becomes eligible for other
  group health coverage or Medicare
• other group health coverage does not include
• health flexible spending arrangement as defined
  by 106(c)
• Dental or Vision only
• Onsite medical treatment if limited coverage
• The date COBRA coverage ends in accordance with
  applicable law

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AMOUNT OF THE SUBSIDY

• 65 of the FULL premium to be paid by the
  employer
• 35 is the FULL premium for the qualified
  beneficiary
• Severance package that includes insurance
  contributions
• how much is subsidy and how much is severance?
• Employer covers the Governments portion until
  reimbursed by the Govt through a payroll tax
  credit (and cash/credit reimbursement if subsidy
  loan exceeds payroll taxes credit)

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ALREADY PAID??

• If an AEI pays the full premium with respect to
  the first or second consecutive period of COBRA
  continuation coverage that commences on or after
  the Enactment Date, the employer must either
  reimburse the individual for the amount of
  premium that exceeds 35 of the total premium or
  provide a credit for such amount that reduces one
  or more subsequent premium payments. If the
  credit method is used, such credit must be used
  within 180 days

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125,000 INCOME LIMITS

• Limited eligibility for highly compensated
  individuals
• Individuals earning more than 145,000 (290,000
  for joint returns) will have their income tax
  liability increased by the total amount of
  Subsidy they receive.
• Individuals earning more than 125,000 but less
  than 145,000 (or more than 250,000 but less
  than 290,000 for joint returns) will have their
  income tax increased by a percentage of their
  total Subsidy received in that year.
• Subsidy recaptured
• INDIVIDUAL Penalty 110 if not reported properly

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MISUNDERSTANDINGS

• ANY coverage lost is eligible for the subsidy
• NO - only INVOLUNTARY termination of employment
• Tax subsidy for health only
• NO All COBRA or continuation Plans except
  Health FSA
• Health, Dental, Vision, Rx, EAP, HRA
• Tax subsidy only for employee
• NO available for ALL qualified beneficiaries
• 125,000 not eligible to receive the subsidy
  ---
• NO - eligible to receive the subsidy but, on a
  sliding scale, it will increase their tax
  liability
• I dont have to do it
• NO failure to provide proper notice or the tax
  subsidy has the plan out of compliance with COBRA
  110 per participant per day penalty
• Ill just cancel my health plan

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ACTION REQUIRED

• Employer reporting required NEW 941 Form
• http//www.irs.gov/newsroom/article/0,,id204505,0
  0.html
• NEW COBRA NOTICES www.dol.gov/ebsa
• General Notice FULL Version AEI or NON-AEI
• NEW QE election notice or QEs in 60 day election
  period need ARRA info
• all COBRA info election subsidy application
• General Notice (Abbreviated version) - AEI or
  Non-AEI
• Enrolled in COBRA subsidy application
• Alternative Notice State Continuation must
  customize
• Notice in Connection with Extended Election
  Periods AEI or Non-AEI
• Not on COBRA as of 2-17-09
• All COBRA info NEW election subsidy
  application
• Notice required within 60 days of enactment date
  subsidy eligible

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BUT, THERE IS MORE
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MICHELLES LAW

• Pub. L. 110-381) signed on Oct. 9, 2008
• Injured or ill college student
• Medically necessary leave of absence
• Cant meet the full-time student criteria
• Must continue health plan benefits for
• ONE YEAR
• Plan Years beginning on or after October 9, 2009

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GOT QUESTIONS ?

• Must continue benefits for 1 year BEGINNING
  WHEN?
• after the first day of the medically necessary
  leave of absence ?
• the date on which the coverage under the plan
  would otherwise terminate ?
• Runs BEFORE COBRA or State Continuation ?
• FMLA for student leave of absence
• Leave of Absence paperwork ?
• Exempt from HIPAA Privacy restrictions ?
• Dependent premium pre-taxed
• but, if no longer a student meet tax qualified
  dependent criteria ?

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• FAMILY MEDICAL LEAVE ACT
• UPDATED

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FAMILY MEDICAL LEAVE ACT

• WHO MUST
• ALL public agencies
• State, local and Federal
• Employers with 50 or more employees within a 75
  mile radius in 20 or more workweeks in the
  current or preceding calendar year

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FAMILY MEDICAL LEAVE ACT

• WHO IS ELIGIBLE
• worked for the employer a total of 12 months
• worked at least 1250 hours over previous 12
  months
• work at a location in U.S. or any territory or
  possession of the U.S.

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BENEFITS of FMLA

• Entitlement to Leave
• Job Restoration After Leave
• Protect for employees who request or take FMLA
• Benefits remain intact as if an active employee
• same benefits
• same employer contribution

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FMLA EVENTS

• Birth or care of a newborn, placement for
  adoption or foster care (within 12 months)
• Care for an immediate family member (spouse,
  child or parent) with a serious health condition
• Medical leave when the employee is unable to work
  because of a serious health condition

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FMLA OPTIONS

• Intermittent Leave
• Birth or adoption subject to employers
  approval
• When Medically Necessary
• Require if paid leave (sick leave or vacation)
  must be taken to cover some or all of the FMLA

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SERIOUS MEDICAL CONDITION

• Illness, injury, impairment or physical or mental
  condition
• any period of incapacity or treatment in
  hospital, hospice or residential medal-care
  facility
• continued treatment by a health care provider
• A condition lasting more than 3 consecutive days
  treatment two or more times

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JOB RESTORATION

• Original Job or Equivalent job with equivalent
  pay, benefits
• Cannot result in the loss of any employment
  benefit they earned before using FMLA leave

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NEW FINAL RULES ON FMLA

• November 17, 2008 DOL released the final rules
  to complete the
• National Defense Authorization Act (NDAA)
• New Rules Take Effect January 16, 2009

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NEW PROVISIONS

• Service member family leave
• eligible spouse, son, daughter or next of kin
• take up to 26 workweeks leave
• to care for a covered service member relative
• take up to 12 weeks leave
• qualified exigency called to active duty in a
  contingency operation or war
• To manage needs childcare, financial planning .
  . .

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NEW PROVISIONS

• Same eligibility requirements
• 26 weeks is NOT ADDED to any other FMLA leave
• Same job restoration
• Keep posted notices
• Update policies

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The Laws TOGETHER

• Family Medical Leave Act FMLA
• Workers Compensation
• On the job injury
• Disability
• Short Term
• Long Term
• COBRA

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DISABILITY

• NOT a Mandate
• Short Term - Normally up to 6 months
• Long Term after 6 months to . . .
• Salary Replacement

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FAMILY MEDICAL LEAVE ACT

• Employers with 50 or more employees within a 75
  mile radius
• 12 weeks NEW 26 weeks for military related
  situations
• Benefits remain intact
• Continuing Salary not required

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WORKERS COMPENSATION

• On the Job Injury
• Pay ALL medical expenses related to the injury
• Salary some sort of compensation is required
• Employee Benefits - ???

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COBRA - 18 MONTH EVENTS

• Reduced Work Hours
• Voluntary Termination of Employment or Retirement
• Layoff
• Fired - Except Gross Misconduct

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FAMILY MEDICAL LEAVE ACT

• NOT A COBRA EVENT
• IF THEY DONT RETURN
• COULD BE COBRA EVENT

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WORKERS COMPENSATION and HEALTH PLAN

• Workers Compensation
• What Does It Do?
• Benefits for On the Job Injury
• CAN run FMLA with WC

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WORKERS COMPENSATION and HEALTH PLAN

• Health Plan
• What Does It Do?
• Limitation and Exclusion nothing related to an
  On the Job Injury
• Eligibility requirement
• Working a minimum of 30 hours per week

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On WORKERS COMPENSATION - Can you cancel
health plan benefits? - After FMLA if
elected - If Not Then WHEN?

• COBRA Event?
• Reduction in Work Hours

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WRITTEN CORPORATE POLICY