When an employee leaves your company (if you employ 20 or more people), he or she is entitled for at least 18 months to continue any group health insurance coverage that you provide to your employees. This continuation coverage requires that the employee pay the insurance premiums to remain on your group health plan. Therefore the employee must be notified when he leaves your employ of the rights he has to elect to continue that coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). The same election notice must be provided to the employee or his/her dependents if the employee dies, the employee divorces, the employee becomes entitled to Medicare, or a dependent child ceases to be considered a dependent under the health plan.
On May 8, 2013, the Department of Labor updated the election notice you must provide to your employees under COBRA when these events happen. The notice has to be provided to the employee within 14 days of when the plan administrator (you as the employer or an administrator you pay to take care of this function) receives notice that one of the these events has occurred. The new election notice and a redlined version showing what has been changed from the notice you are now using is available on the DOL’s website at: http://www.dol.gov/ebsa/COBRA.html. COBRA carries a stiff daily monetary penalty for employers or administrators who do not timely and properly provide these election notices, so you should start using the new notice immediately.
The DOL also publishes a guide to help you understand and administer COBRA: http://www.dol.gov/ebsa/pdf/cobraemployer.pdf. However, because COBRA can be tricky, I prefer that my employer clients pay the little extra fee per month to have your insurance company act as your COBRA administrator and take responsibility to assure that the deadline and notice requirements are met.
Whenever a Texas employer receives a Notice of Application for Unemployment Benefits, the first question that runs through the employer’s head is “How much is this going to cost me?” The answer to that question can influence whether the employer decides to protest the unemployment decision, how much time, effort and worry to invest in the protest and whether to hire a lawyer to protest the unemployment award. The cost estimate has been a difficult question for employment lawyers to answer. But now the TWC has provided all of us a calculator that will estimate how a particular employer’s tax rate will change if the former employee collects the maximum unemployment benefits.
When you receive the initial notice, go to this site and input your former employee’s salary for four of the last 6 quarters and the tax rate information off of your annual Tax Rate Notice from the TWC to get a tax rate estimate. With that estimated tax rate, you can compare it to your previous TWC reports and see the change that will occur in the Texas unemployment taxes that you will pay based on that one employee receiving unemployment benefits. Remember as you make that comparison that your tax rate increase will be effective for three years, not just one, after an employee files a successful unemployment claim.
Since the U.S. Supreme Court ruling upholding the Patient Protection and Affordable Care Act (“PPACA”), health care reform questions have been raised by many of my employer clients. It is important for small businesses to know if and how the PPACA will affect them.
The PPACA “mandate”, requiring employers to provide health insurance to employees or face a penalty, does not apply to employers with less than 50 full-time employees or the equivalent of 50 full-time employees. This is the small business exemption to the mandate.
To apply this small business exemption, Continue reading Health Care Reform for Small Employers
If you have fired or laid off an employee since September 2008, you know about the group health insurance continuance provisions related to COBRA that allow an employee to only pay 35% of the premiums due, while the federal government subsidizes the rest of the premium. That subsidy was supposed to expire at the end of 2009, so that employees laid off after that date would not receive the subsidy. In addition, the subsidy was only supposed to cover the first 9 months after the employee lost his job.
On December 21, 2009, President Obama signed a COBRA subsidy extension that extends the expiration date to February 28, 2010. What that means is that if you involuntarily terminate the employment of one of your workers in the next two months, that employee will also be eligible for the COBRA subsidy.
Even more important, the new legislation extends the subsidy for 15 months rather than just 9 months after the employee loses his job. And yes it is retroactive, meaning that any employee who has used up the 9 months is eligible to receive 6 more months of subsidies and a refund of overpayments.
By February 19, you have to send out written notices of this opportunity to any employee who was involuntarily terminated on or after October 31, 2009. You also have to send notices to anyone who stopped paying COBRA premiums after 9 months or anyone who overpaid by continuing their premiums after the 9 month subsidy expired. So it is best to go back and review the COBRA files for any employee involuntarily terminated since September 30, 2008.
Your group health insurance agent should be able to help you with the required notice language and information on who has been receiving COBRA continuation coverage and for how long. Just don’t ignore this issue. You only have 60 days to get your paperwork in order and start paying subsidies to be reimbursed by the federal government through your payroll taxes.
- Do you provide group health, dental or vision insurance or a Health Reimbursement Account to your employees?
- Do you have at least 20 employees, whether they are on the group health insurance or not?
- Have you laid off or fired any employees since September 1, 2008?
If you answered these 3 questions “yes”, you are required to act immediately under the American Recovery and Reinvestment Act of 2009 (“ARRA”) to notify your former employees of subsidies available for their COBRA premiums (and those of their dependents). In addition, you as an employer have to advance that subsidy and then recoup it through payroll tax deductions.
If you have a knowledgeable group health insurance agent like my great friend, Julie Hulsey at Neely, Craig & Walton, LLP, in Amarillo (who supplied me with all of the information for this post), you probably have already been contacted about complying with these COBRA subsidy requirements.
If not, here is some very basic information that you need to digest quickly and an action plan for complying immediately (for example, Friday, April 18, 2009, is the deadline to mail notices to your former employees and their dependents).
Continue reading COBRA Changes Affect Employers
There was a very informative article in Time Magazine last week called “The Health Care Crisis Hits Home”. The author, a journalist with 15 years covering health policy, wrote of her brother in Texas whose kidneys are failing. He had been insured for 6 years with one company, buying a new individual short-term policy each six months because group health insurance wasn’t available through his employer. After being diagnosed, he found out that the short-term policies he purchased were “junk”. One expert said, “No one should ever buy them. It is false security that is being sold”.
This article demonstrates the catch-22 which we face in Texas. None of us want our employees to face overwhelming medical bills. However, many of us as employers feel like we can’t afford to provide health insurance for our employees. In fact, the Time article says that only 37% of small companies in Texas (less than 50 employees) offer group medical coverage. As a result though, 1 in 4 Texans is without health insurance. Even more are underinsured, like the author’s brother, who have some type of coverage but find out when they become sick that their policy is insufficient.
What can you do about this as a small Texas employer? Talk to your employees about whether health insurance is important to them and if they want to make a sacrifice to obtain it. More and more surveys that I see in my human resources and employment law trade magazines indicate that benefits are equally as important to an employee as the salary offered. I know of many employees, such as my husband and his fellow high school teachers, who are highly motivated by the benefits that their jobs provide to them and their families, particularly since their salaries are nothing to get excited about considering the importance of the work they perform.
In Texas, you can obtain a group health insurance policy as long as the employer pays 50% or more of the employee’s premium. Because the group rates are so much lower than the rates for an individual policy and the coverage is so much more complete, your employees may be willing to pay for as much as half of their premiums in order to be protected. This could also mean that you and your own family could obtain decent coverage.
Several items about employer-provided group health care benefits have crossed my desk lately. In light of the presidential election next week, all of these items could be addressed soon under a new administration. But it is important to understand the scope of the problem that group health insurance has become for employers.
The rising cost of health care benefits is the issue that will have the biggest impact on the workplace in the years ahead, according to a recent survey of human resource professionals by the Society for Human Resource Management. The HR professionals surveyed believe that health care costs not only have the biggest impact on the bottom line but will affect our global competitiveness.
The national concern over rising health care premiums is echoed in Texas for good reason, according to an October 23 article in the Dallas Morning News:
Texans earn more than they did eight years ago, but their health insurance premiums have jumped six times faster than their wages and gone up faster than the national average, according to a study to be released today.
In its study, “Premiums versus Paychecks,” Families USA, a Washington, D.C., nonprofit consumer advocate, found that health care premiums rose 86.8 percent from 2000 to 2007 – from $6,638 to $12,403 – while median earnings rose just 15 percent – going from $23,032 to $26,484.
“[Texas] earnings were actually a little better than the rest of the nation [14.5 percent], but health care premiums increased faster,” said Ron Pollack, executive director of Families USA.
In my part of the country, those rising health care costs are causing many employers to drop group health care coverage completely as a benefit. Only high paying white-collar jobs, government jobs and the largest employers in the area still consistently provide group health care benefits, and many of them are requiring their employees to share in the cost of the premiums.
Apparently that trend is not just local. Continue reading Health Care Dilemmas for Employers