COBRA | Fraser Blog

Client Alert: IRS Issues Important Information on COBRA Subsidies

The IRS has recently issued 86 questions and answers regarding the COBRA premium assistance requirements under the American Rescue Plan Act of 2021 (“ARPA”). See IRS Notice 2021-31.

As explained in previous Client Alerts, the ARPA requires that employers provide 100% COBRA subsidies to certain assistance eligible individuals from April 1, 2021 through September 30, 2021. Not only will COBRA be fully paid for these individuals during this time period, but eligible individuals who had previously declined COBRA (or who had elected COBRA and dropped it) have a second chance to elect and take advantage of the subsidized COBRA coverage. Notices of such subsidies and new election rights are due by May 31, 2021, so time is of the essence.

Q&A Highlights

Here are some highlights of these IRS Q&As but please note that the IRS guidance is extensive. This Client Alert just touches on some of the issues.

Who is an AEI?

Notice 2021-31 reiterates that an assistance eligible individual (AEI) is defined as an individual who (1) is a qualified beneficiary with respect to a period of COBRA continuation coverage during the period from April 1, 2021, through September 30, 2021, (2) who is eligible for that COBRA continuation coverage by reason of a qualifying event that is an involuntary termination of employment (except for gross conduct) or reduction of hours, and (3) who elects COBRA continuation coverage. This includes employees, spouses, and dependent children.

However, the IRS now explains that an individual can become an AEI more than once. As we know, being eligible for certain other group health plan coverage or Medicare will disqualify one from AEI status. Losing such eligibility at a later date may result in regaining AEI status. For example, an employee is terminated, loses coverage, and becomes an AEI on May 1, 2021. On June 1, 2021, the individual becomes eligible for his spouse’s employer’s group health plan and loses AEI status. However, on July 1, 2021, the spouse has an involuntary termination and loses coverage. Both the individual and spouse become AEIs as of July 1, 2021.

The notice goes on to provide that because eligibility for other group health coverage and/or Medicare will disqualify one from being an AEI, employers may required individuals to provide a self-certification or attestation that they are not eligible for any disqualifying group health plan coverage or Medicare. Employers must keep a record of such attestations.

The IRS clarifies that eligibility for other group health plan coverage will only create a loss in AEI status once that individual is permitted to enroll in that coverage (i.e., AEI status continues during a waiting period or until the next enrollment opportunity). Please note that the Emergency Relief Notices and the Outbreak Period extensions of deadlines have prolonged enrollment for HIPAA special enrollment events. So if an individual is able to enroll in a spouse’s plan (or another group health plan) due to HIPAA special enrollment extensions, that individual will not be an AEI. This can be a complicated determination.

Moreover, the IRS has explained that an individual who elected and remained on COBRA beyond the initial 18-month period due to a disability determination or a second qualifying event is also an AEI and eligible for the subsidy if the COBRA extended period falls within April 1 to September 30, 2021. For example, a qualified beneficiary who lost coverage 3 years ago due to termination/reduced hours may still be on COBRA as of April 1 due to a second qualifying event (e.g., divorce). The IRS recent Q&As clarified that these individuals will also be AEIs…

What is a Reduction in Hours?

Loss of coverage due to reduction in hours would cause the qualified beneficiary to potentially become an AEI regardless of whether the reduced hours is voluntary or involuntary. Furloughs and strikes are considered reduction in hours, so long as the employee and employer intend on maintaining the employment relationship.

What is an Involuntary Termination?

Many questions have arisen regarding involuntary terminations, such as whether resignations or non-renewal of temporary contracts can be deemed involuntary terminations. The determination of whether a termination is involuntary will be based on the facts and circumstances.

The IRS defines involuntary termination of employment as a “severance from employment due to the independent exercise of the unilateral authority of the employer to terminate employment, other than due to the employee’s implicit or explicit request, where the employee was willing and able to continue performing services.” See Q&A-24. This includes circumstances where the employee is terminated while the employee is off work due to illness or disability if there was a reasonable expectation that the employee would return to work after he or she had recovered. Moreover, an employee-initiated termination will also constitute an involuntary termination if it is due to employer action that resulted in a material negative change in employment, similar to a constructive discharge.

With regard to resignations or other terminations which are designated as voluntary, if the facts and circumstances indicate that the employee was able and willing to work and that the employer would have terminated the employee absent the resignation or “voluntary“ termination, the IRS will deem this an involuntary termination.

A resignation resulting from a material change in the geographic location of employment for the employee is also deemed an involuntary termination.

An employee who leaves employment due to health concerns, however, is generally not a involuntary termination. Neither is an employee who terminates due to child-care reasons.

Some of these circumstances could result in AEI status if the individual lost coverage due to a reduction in hours. Moreover, if the employer involuntarily and materially reduced the employee’s hours, an employee who terminates employment in response will be deemed to have been involuntarily terminated.

Temporary employees also present an interesting situation. Typically, temporary employees are hired on a short-term contractual basis. Whether the non-renewal of the contract at its expiration is deemed an involuntary termination is again a factual determination.

Q-34. Does an involuntary termination of employment include an employer’s decision not to renew an employee’s contract, including for an employee whose employer is a staffing agency?

A-34. Generally, yes. An employer’s decision not to renew an employee’s contract will be considered an involuntary termination of employment if the employee was otherwise willing and able to continue the employment relationship and was willing either to execute a contract with terms similar to those of the expiring contract or to continue employment without a contract. However, if the parties understood at the time they entered into the expiring contract, and at all times when services were being performed, that the contract was for specified services over a set term and would not be renewed, the completion of the contract without it being renewed is not an involuntary termination of employment.

See Q&A-34.

What Plans is the Subsidy Available For?

The IRS confirms that the subsidy is available for any group health plan subject to COBRA (including certain HRAs, as well as vision-only and dental-only plans), except for health FSAs offered under Code section 125 plans.

Extended Election Period Information

With regard to AEIs who previously had not elected or dropped their COBRA coverage, they may now elect COBRA during the extended election period. This includes spouses and dependents who were covered under the group health plan along with the employee on the day before the involuntary termination or reduced hours resulting in the loss of coverage.

The IRS clarifies that these AEIs may waive COBRA for any period before their election. If COBRA for an HRA is elected during the extended period, the AEI is not entitled to reimbursement of expenses incurred after the qualifying event and before the first period of COBRA coverage beginning on or after April 1, 2021.

Tax Credit Information

Those to whom COBRA premiums are payable (generally the employer for most purposes) are entitled to a refundable tax credit against their share of Medicare taxes. This is now allowed under newly added Code section 6432. Notice 2021-31 includes numerous questions and answers regarding the calculation of this tax credit as well as how to claim it.

Conclusion

This Client Alert sets forth highlights of these Q&As but by no means addresses them all. Moreover, the IRS indicates further guidance may be forthcoming. Please seek out advice on these complicated issues.

As you are well aware, the law and guidance are rapidly evolving in this area. Please check with your Fraser Trebilcock attorney for the most recent updates.

Fraser Trebilcock is committed to providing you valuable information. Please watch for upcoming alerts on these and other topics.

We have created a response team to the rapidly changing COVID-19 situation and the law and guidance that follows, so we will continue to post any new developments. You can view our COVID-19 Response Page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.

Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.

Brian T. Gallagher is an attorney at Fraser Trebilcock specializing in ERISA, Employee Benefits, and Deferred and Executive Compensation. He can be reached at (517) 377-0886 or bgallagher@fraserlawfirm.com.

Client Alert: DOL Releases COBRA Model Subsidy Notices – Due By May 31st!

As explained in previous Client Alerts, the American Rescue Plan Act of 2021 (“ARPA”) requires that employers provide 100% COBRA subsidies to certain assistance eligible individuals from April 1, 2021 through September 30, 2021. Not only will COBRA be fully paid for these individuals during this time period, but eligible individuals who had previously declined COBRA (or who had elected COBRA and dropped it) have a second chance to elect and take advantage of the subsidized COBRA coverage. Notices of such subsidies and new election rights are due by May 31, 2021, so time is of the essence.

Summary of COBRA Subsidy

Under ARPA, any assistance eligible individual (“AEI”) shall be treated as having paid the full amount of the COBRA premium from April 1, 2021 through September 30, 2021.

The Department of Labor recently issued additional guidance, FAQs, as well as the model notices, found here:

COBRA Premium Subsidy dedicated page, available here;
FAQs, available here;
Model Notices:
- General Notice and Election Notice, available here;
- Notice in Connection with Extended Election Period, available here;
- Alternative Notice, available here;
- Notice of Expiration of Premium Assistance, available here;
- Summary of the COBRA Premium Assistance Provisions, available here.

Assistance Eligible Individuals

AEIs include individuals who, from April 1 through September 30, 2021, are COBRA qualified beneficiaries and:

are eligible for COBRA due to involuntary termination (for reasons other than the employee’s gross misconduct) or reduction in hours; and
elect such coverage.

However, the 100% subsidy is not available to AEIs for months beginning on or after the earlier of:

the date the individual is eligible for coverage under another group health plan (other than excepted benefits only, qualified small employer HRAs, or FSAs);
the date the individual is eligible for Medicare; or
the date COBRA expires, which is the earlier of: (a) the date the maximum COBRA period ends; or (b) the date the maximum COBRA period should have ended if it had been originally elected or not discontinued.

AEIs must notify the group health plan when they are no longer eligible for subsidies due to being eligible for other group health plans or Medicare. Penalties will ensue if they do not.

New Election Rights

For individuals who do not have a COBRA election in effect as of April 1, 2021 (but could have had they initially elected COBRA or not dropped COBRA coverage early), the ARPA allows such individuals to elect COBRA any time beginning April 1, 2021 and ending 60 days after receiving notice that they are allowed to do so. These notices must be provided to AEIs by May 31, 2021.

Basically, any individual who was eligible for COBRA due to involuntary termination (except for gross misconduct) or reduction in hours after October 1, 2019 could be an AEI. Therefore, it is imperative to determine who these individuals are and to provide them the requisite notice. In some cases, an individual may only be an AEI for a month or two depending on when the original COBRA maximum period ends.

These new COBRA elections will begin on or after April 1, 2021 and cannot extend beyond the original date of COBRA had it originally been elected or not discontinued. The Department of Labor released FAQs which clarify that an AEI can elect COBRA prospectively after receiving the subsidy notice or can elect it retroactively to April 1, 2021. See Q5 of the FAQs.

Switching Coverage

Any AEI may, within 90 days after notice, elect to switch from one group health plan offered by the plan sponsor (i.e., employer in most cases) to another coverage offered by the plan sponsor, if:

the employer permits the switch;
the premium for such different coverage does not exceed the premium for coverage in which the individual was enrolled at the time of the qualifying event;
the different coverage is also offered to similarly situated active employees of the employer; and
the different coverage is not only for excepted benefits, a qualified small employer HRA, or a health FSA.

See Q15 of the FAQs.

New Notice Requirements

Along with traditional COBRA requirements, plan administrators (i.e., employers or TPAs in most cases) must provide clear notices of the ARPA’s COBRA premium assistance / subsidy requirements, new election rights, as well as notices of when the subsidy will expire.

Premium Assistance Notice for New COBRA Qualified Beneficiaries

For AEIs who become entitled to elect COBRA at any point from April 1 through September 30, 2021, the COBRA election notices must include the following:

the availability of the premium assistance if eligible;
the option to enroll in different coverage (if the employer permits);
the forms necessary to establish eligibility for the premium assistance;
the name, address, the phone number to contact the plan administrator (or TPA, etc) regarding the premium assistance;
a description of the extended election period;
a description of the qualified beneficiary’s obligation to notify the plan of their eligibility for other group health plan coverage or Medicare and the penalty if they fail to do so (which, for intentional failures, is sizable under the ARPA); and
a description of the right to the subsidized premium as well as the conditions for receiving it.

This can be accomplished by amending the current notices or including a separate document with the notices to describe the above.

The DOL Model General Notice and Election Notice are found here.

The “Summary of the COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021,” which contains information on the subsidy as well as the forms to elect or discontinue the premium assistance, must also be provided with the General Notice and Election Notice. The Summary can be found here.

Premium Assistance Notice for Current COBRA Qualified Beneficiaries / Re-Opened Election Rights Notice

This notice must be provided to those who are currently enrolled in COBRA to advise them of the new subsidy. Additionally, the notice also must be provided to AEIs who previously failed to elect COBRA or discontinued it and who may now elect COBRA under the extended election period.

Notice in Connection with Extended Election Period is found here.

As above, the “Summary of the COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021,” which again contains information on the subsidy as well as the forms to elect or discontinue the premium assistance, must also be provided with the Notice in Connection with Extended Election Period. The Summary can be found here.

These notices must be provided by May 31, 2021.

Subsidy Expiration Notice

Additionally, the plan administrator must provide clear notice when the premium assistance expiration date is approaching, as well as notice that the individual may be eligible to continue COBRA without the premium subsidy or other group health plan coverage (if eligible).

This notice must be provided between 45 days before such expiration and ending 15 days before the expiration date. However, this notice requirement does not apply if the individual will be losing the subsidy due to being eligible for another group health plan or Medicare.

The DOL’s Model Notice of Expiration of Premium Assistance can be found here.

COBRA Penalties

Failure to provide these notices is deemed a failure to meet the COBRA notice requirements. As you may know, failure to provide accurate and timely COBRA notices come with hefty penalties, so compliance is imperative.

Employer Tax Credit

In most cases, employers will be responsible for initially funding these COBRA subsidies and will receive a payroll tax credit for doing so. These tax credits are calculated per quarter, and credits provided may not exceed the Code section 3111(b) taxes imposed on wages paid for employment of all the employer’s employees. However, if the amount of the credit does exceed this amount, it is treated as an overpayment which will be refunded. Additionally, credits may be advanced.

Conclusion

Due to severe penalties for COBRA noncompliance, it is incredibly important for employers to act swiftly to identify individuals who are entitled to subsidies and to ensure notices, procedures, plans and other employee communications are updated quickly. Coordination with third-party administrators, consultants, and attorneys will also be important to ensure legal and tax compliance. It is also essential to keep in mind the expiration date of these legal changes, so that regular COBRA notices and procedures go back into effect after September 30, 2021.

As you are well aware, the law and guidance are rapidly evolving in this area. Please check with your Fraser Trebilcock attorney for the most recent updates.

Fraser Trebilcock is committed to providing you valuable information. Please watch for upcoming alerts on these and other topics.

Client Alert: The ARPA Brings COBRA Subsidies Back!

The American Rescue Plan Act (“ARPA”) was enacted Thursday, March 11, and will have a major impact on employee health and welfare benefit plans.

In part, the ARPA brings back the requirement to provide COBRA subsidies, although this time premiums are 100% subsidized.

Background

Do you recall back in 2009 when a percentage of COBRA premiums were reimbursed by the government? We called these ARRA COBRA subsidies. The American Recovery and Reinvestment Act of 2009 (ARRA) reduced the COBRA premium in some cases. The premium reductions were available to certain individuals who experienced qualifying events that were involuntary terminations of employment during the period beginning with September 1, 2008 and ending with December 31, 2009. If one qualified for the premium reduction, s/he needed only pay 35 percent of the COBRA premium otherwise due. The premium reduction was available for up to nine months.

Well, COBRA subsidies are back! And employers must pay close attention.

ARPA of 2021: 100% Subsidy

Under the American Rescue Plan Act (“ARPA”), any assistance eligible individual shall be treated as having paid the full amount of the COBRA premium from April 1, 2021 through September 30, 2021.

Moreover, any assistance eligible individual (“AEI”) may, within 90 days after notice, elect to switch from one group health plan offered by the plan sponsor (i.e., employer in most cases) to another coverage offered by the plan sponsor, if:

the employer permits the switch;
the premium for such different coverage does not exceed the premium for coverage in which the individual was enrolled at the time of the qualifying event;
the different coverage is also offered to similarly situated active employees of the employer; and
the different coverage is not only for excepted benefits, a qualified small employer HRA, or an FSA.

However, the 100% subsidy is not available to AEIs for months beginning on or after the earlier of:

the date the individual is eligible for coverage under another group health plan (other than excepted benefits only, qualified small employer HRAs, or FSAs);
the date the individual is eligible for Medicare; or
the date COBRA expires, which is the earlier of: (a) the date the maximum COBRA period ends; or (b) the date the maximum COBRA period should have ended if it had been originally elected or not discontinued.

AEIs must notify the group health plan when they are no longer eligible for subsidies due to being eligible for other group health plans or Medicare.

Assistance Eligible Individuals (AEIs) & New Election Rights

AEIs include individuals who, from April 1 through September 30, 2021, are COBRA qualified beneficiaries who:

are eligible for COBRA due to involuntary termination (for reasons other than the employee’s gross misconduct) or reduction in hours; and
elect such coverage.

However, with regard to COBRA election periods, for individuals who do not have a COBRA election in effect as of April 1, 2021 (but could have had they elected COBRA or not dropped COBRA coverage early), the ARPA allows such individuals to elect COBRA any time beginning April 1, 2021 and ending 60 days after receiving notice that they are allowed to do so…

For these new elections, COBRA will begin on or after April 1, 2021 and cannot extend beyond the original date of COBRA had it originally been elected or not discontinued.

New Notice Requirements

Premium Assistance Notice

For AEIs who become entitled to elect COBRA at any point from April 1 through September 30, 2021, the COBRA election notices must include the following:

the availability of the premium assistance if eligible;
the option to enroll in different coverage (if the employer permits);
the forms necessary to establish eligibility for the premium assistance;
the name, address, the phone number to contact the plan administrator (or TPA, etc) regarding the premium assistance;
a description of the extended election period;
a description of the qualified beneficiary’s obligation to notify the plan of their eligibility for other group health plan coverage or Medicare and the penalty if they fail to do so (which, for intentional failures, is sizable under the ARPA); and
a description of the right to the subsidized premium as well as the conditions for receiving it.

This can be accomplished by amending the current notices or including a separate document with the notices to describe the above.

Model notices are to be provided by the Department of Labor within 30 days of the ARPA’s enactment.

Re-Opened Election Rights Notice

For AEIs who previously failed to elect COBRA or discontinued it, but may now elect under the extended election period, the above notice must be provided within 60 days of April 1, 2021.

Subsidy Ending Notice

Additionally, the plan administrator (i.e., the employer or TPA in most cases) must provide clear notice when the premium assistance expiration date is approaching, as well as notice that the individual may be eligible to continue COBRA without the premium subsidy or other group health plan coverage (if eligible).

Notice must be provided between 45 days before such expiration and ending 15 days before the expiration date. This notice requirement does not apply if the individual will be losing the subsidy due to being eligible for another group health plan or Medicare.

Here again, the Department or Labor will be providing model notices, but within 45 days of the ARPA’s enactment.

COBRA Penalties

Employer Tax Credit

Conclusion

Due to severe penalties for COBRA noncompliance, it is incredibly important for employers to act swiftly to ensure notices, procedures, plans and other employee communications are updated quickly. Coordination with third-party administrators, consultants, and attorneys will also be important to ensure legal and tax compliance. It is also essential to keep in mind the expiration date of these legal changes, so that regular COBRA notices and procedures go back into effect after September 30, 2021.

As you are well aware, the law and guidance are rapidly evolving in this area. Please check with your Fraser Trebilcock attorney for the most recent updates.

Fraser Trebilcock is committed to providing you valuable information. Please watch for upcoming alerts on these and other topics.

[Client Alert] Outbreak Period Nightmare: Employee Benefit Deadline Extensions Now Based on Individual Case-by-Case Basis

Employee benefit plan administration is no small feat. However, it is becoming more and more difficult, especially with pandemic related modifications. As you may recall from our previous Client Alert regarding the Outbreak Period, various benefit deadlines were extended due to COVID-19. Plans could not deny certain benefits or impose certain deadlines during the designated Outbreak Period (i.e., March 1, 2020 through 60 days after the National Emergency ends (or another specified date)). However, when the Outbreak Period ends has been a lingering question recently, and the Department of Labor has just answered it in a way that may make plan administrators’ heads spin.

In summary, the period of time which must be disregarded for certain benefits deadline purposes (such as HIPAA special enrollment, as well as certain COBRA and claims procedure due dates) will now end on the earlier of: (a) 1 year from the date that the individual or plan was first eligible for the particular relief, or (b) 60 days after the announced end of the National Emergency (the end of the Outbreak Period). What does this mean? It means that plan administrators must keep track on a case-by-case basis of each individual who would have had a deadline imposed on/or after March 1, 2020 but for the 2020 relief, the date of the original deadline, and track one year from that date (unless the Outbreak Period ends earlier).

Background

Last year when the pandemic hit, and to assist plan participants and beneficiaries, employers and other plan sponsors, plan fiduciaries, and other service providers of employee benefit plans impacted by the COVID-19 pandemic, the U.S. government took the following action as authorized by ERISA Section 518:

2020 Disaster Relief Notice

On April 28, 2020, the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) issued EBSA Disaster Relief Notice 2020-01 (Disaster Relief Notice). The Disaster Relief Notice provided deadline relief and other guidance and extended the time for plan officials to furnish benefit statements, annual funding notices, and other notices and disclosures required by Title I of the Employee Retirement Income Security Act of 1974 (ERISA).

2020 Joint Notice

Additionally, on April 28, 2020, the Department of Treasury, the Internal Revenue Service (IRS), and EBSA issued a joint notice which extended certain time frames affecting participants and beneficiaries under ERISA and the Internal Revenue Code (Joint Notice). The Joint Notice extended time frames affecting a participant’s right to group health plan coverage during the COVID-19 outbreak, special enrollment periods, and COBRA continuation of such coverage. Time periods for filing claims for benefits, appealing denied claims, and external review periods were also extended.

The Joint Notice is applicable to all group health plans, disability plans, other employee welfare benefit plans, and employee pension benefit plans subject to ERISA or the Code. Specifically, the Joint Notice provided that these plans must disregard the period from March 1, 2020 until sixty (60) days after the National Emergency ends (or other specified date) when determining certain deadlines for plan participants, beneficiaries, qualified beneficiaries, and claimants. This period is called the Outbreak Period. In particular, plans must disregard the Outbreak Period for the following due dates:

HIPAA Special Enrollment
COBRA Election Period
COBRA Premium Payment Due Date
Date for Individuals to Notify the Plan of Qualifying Events or Disability Determinations
Claim Procedure Date for Individuals to File A Benefit Claim
- Keep in mind health FSA runout periods and forfeitures are also delayed during this period
Claim Procedure Date for Claimants to File An Appeal
Date for Claimants to File A Request for External Review
Date for Claimants to Perfect A Request for External Review

Note: The Joint Notice only extended the claims procedure deadlines for claimants; it did not explicitly extend the date by which a plan administrator had to respond to claims and appeals. However, the plan administrator’s deadlines for issuing such adverse benefit determination on claims and appeals would appear to fall within the general notice and disclosure relief provided by the Disaster Relief Notice.

Additionally, for purposes of group health plan obligations, the Outbreak Period is disregarded for the following:

Date to Provide a COBRA Election Notice

Employers and Plan Sponsors have had to pay close attention to these deadlines as they can have significant administrative and economic impacts.

Lingering Questions

However, many have questioned whether the deadline extension would end on February 28, 2021 due to statutory provisions within ERISA and the Internal Revenue Code stating that with such declared disasters, the Secretaries of Labor and Treasury may provide that periods of time up to one year may be disregarded when determining certain deadlines. That one year period from March 1, 2020 would have expired February 28, 2021.

However, the Department of Labor answered at the last hour, and unfortunately, the difficulty of these previous administrative functions has just been magnified.

Answer: EBSA Disaster Relief Notice 2021-01 (Released Friday, February 26, 2021)

On Friday, February 26, 2021, the Department of Labor released EBSA Disaster Relief Notice 2021-01. The Departments of Treasury, IRS and HHS have reviewed and concur with this guidance.

Instead of ending the disregarded periods on February 28, 2021, or instead of extending the period of disregarded periods to a future date certain, the Department of Labor instituted a case by case analysis, applicable to individuals and plans for whom timeframes were extended. Specifically, individuals and plans who are subject to the relief afforded under the 2020 Disaster Relief Notice and the 2020 Joint Notice as described above will have the applicable periods under the Notices disregarded until the earlier of:

(a) 1 year from the date they were first eligible for relief, or
(b) 60 days after the announced end of the National Emergency (the end of the Outbreak Period).

On the applicable date, the timeframes for individuals and plans with periods that were previously disregarded under the Notices will resume. In no case will a disregarded period exceed 1 year.

Notice 2021-01 provides examples to illustrate application of the above:

If a qualified beneficiary, for example, would have been required to make a COBRA election by March 1, 2020, the Joint Notice delays that requirement until February 28, 2021, which is the earlier of 1 year from March 1, 2020 or the end of the Outbreak Period (which remains ongoing). Similarly, if a qualified beneficiary would have been required to make a COBRA election by March 1, 2021, the Joint Notice delays that election requirement until the earlier of 1 year from that date (i.e., March 1, 2022) or the end of the Outbreak Period. Likewise, if a plan would have been required to furnish a notice or disclosure by March 1, 2020, the relief under the Notices would end with respect to that notice or disclosure on February 28, 2021. The responsible plan fiduciary would be required to ensure that the notice or disclosure was furnished on or before March 1, 2021. In all of these examples, the delay for actions required or permitted that is provided by the Notices does not exceed 1 year.

The Department of Labor further reiterates concerns over COVID-19 related problems that plan participants and beneficiaries may encounter. In such vain, the Department states as follows:

plan fiduciaries should make reasonable accommodations to prevent the loss of or undue delay in payment of benefits in cases where pandemic delayed deadlines are reinstated; and
plans should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames, such as:
- affirmatively sending a notice regarding the end of the relief period;
- reissuing or amending disclosures regarding the end of the relief period and the time period in which participants and beneficiaries are required to take action, e.g., COBRA election notices and claims procedure notices;
- reminding participants and beneficiaries who are losing coverage under ERISA group health plans that other coverage options may be available to them, including the opportunity to obtain coverage through the Health Insurance Marketplace in their state.

The Department of Labor understands that full and timely compliance with ERISA’s disclosure and claims processing requirements by plans and service providers may not always be possible due to the end of the relief period. Good faith compliance will be taken into consideration.

Conclusion

The case-by-case determinations were not anticipated last year and will require continual monitoring and possibly enhanced recordkeeping, especially if initially imposed deadlines were not accurately recorded at the time due to the deadline delay. Plan sponsors should promptly speak with their benefit and COBRA administrators to ensure the new guidance can be followed. And, as mentioned by the Department of Labor, group health plan communications regarding these deadline changes should be made as quickly as possible.

As you are well aware, the law and guidance are rapidly evolving in this area. Please check with your Fraser Trebilcock attorney for the most recent updates.

Client Alert: New Model COBRA Notices Issued by DOL

Along with other recent changes, including the delay of COBRA deadlines and premium payments (see our Client Alert: Major Extension of Employee Benefit Plan Deadlines Due to COVID-19 Outbreak), the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) released new model notices that employers may use to comply with the notice obligations under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). A News Release as well as frequently asked questions (FAQs) were also posted.

These revised general and election model notices provide additional information regarding the interaction between COBRA and Medicare. While no legal changes are referenced, a new paragraph explains to employees that there may be advantages to enrolling in Medicare before, or instead of, electing COBRA.

Along with a few other small revisions, the model notices insert a new section addressing whether an individual can enroll in Medicare instead of COBRA, the timeframe for doing so, and the potential penalties for waiting to enroll in Medicare Part B. The new section also describes the priority of payment if both COBRA and Medicare are elected.

Employers should ensure their COBRA notices are updated to include these revisions.

Notably, these new notices do not address the extension of time to elect COBRA or to pay for COBRA during the coronavirus Outbreak Period. (See our Client Alert: Major Extension of Employee Benefit Plan Deadlines Due to COVID-19 Outbreak). Employers are not required to provide COBRA election notices during the Outbreak Period, and individuals are not required to elect or pay for COBRA during the Outbreak Period. Separately, in its recent FAQs (accompanying the Joint Notice that extends COBRA deadlines, among others), the EBSA reminds individuals that if employer coverage is lost, Marketplace coverage is another alternative, and it may be more affordable than COBRA. The FAQs review the Marketplace’s special enrollment periods (which have not been extended).

Issues regarding communication of all these changes will emerge quickly.

Important Note: While the Department of Labor considers use of these model notices by employers to be good faith compliance, it is important to remember that participant and qualified beneficiary litigation may still ensue. These model notices do not address numerous other important circumstances, such as limited application of COBRA continuation for most underspent health FSAs. Additionally, it is recommended that the general notices contain information on how an individual must provide notice of a qualifying event (such as whether oral notice or electronic notice will be accepted) and what information must accompany the notice of qualifying event.

With all the continual changes, it is important to be in contact with your employee benefits advisors and counsel. Please check with your Fraser Trebilcock attorney for the most recent updates.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

Client Alert: Major Extension of Employee Benefit Plan Deadlines Due to COVID-19 Outbreak

The coronavirus outbreak has affected virtually every aspect of normal life and business relations, including operation and administration of employee benefit plans. To assist plan participants and beneficiaries, employers and other plan sponsors, plan fiduciaries, and other service providers of employee benefit plans impacted by the COVID-19 pandemic, the U.S. government took action as authorized by ERISA Section 518.

On April 28, 2020, the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) issued EBSA Disaster Relief Notice 2020-01 (Disaster Relief Notice). The Disaster Relief Notice provides deadline relief and other guidance and extends the time for plan officials to furnish benefit statements, annual funding notices, and other notices and disclosures required by Title I of the Employee Retirement Income Security Act of 1974 (ERISA).

Additionally, on April 28, 2020, the Department of Treasury, the Internal Revenue Service, and EBSA issued a joint notice which extends certain time frames affecting participants and beneficiaries under ERISA and the Internal Revenue Code (Joint Notice). The Joint Notice extends certain time frames affecting a participant’s right to group health plan coverage during the COVID-19 outbreak, special enrollment periods, and COBRA continuation of such coverage after employment ends. Time periods for filing claims for benefits, appealing denied claims, and external review periods are also extended.

While the Department of Health and Human Services (HHS) was not involved in this round of guidance, it has been in consultation with EBSA and the Treasury and has advised that it will extend similar relief timeframes applicable to non-Federal governmental group health plans.

The News Release and Frequently Asked Questions regarding the Disaster Notice and Joint Notice can be found here:

FAQs

News Release

Joint Notice

The Joint Notice is applicable to all group health plans, disability plans, other employee welfare benefit plans, and employee pension benefit plans subject to ERISA or the Code. Specifically, these plans must disregard the period from March 1, 2020 until sixty (60) days after the National Emergency ends (or other specified date) when determining certain deadlines for plan participants, beneficiaries, qualified beneficiaries, and claimants. This period is called the Outbreak Period. In particular, plans must disregard the Outbreak Period for the following due dates:

HIPAA Special Enrollment
COBRA Election Period
COBRA Premium Payment Due Date
Date for Individuals to Notify the Plan of Qualifying Events or Disability Determinations
Claim Procedure Date for Individuals to File A Benefit Claim
- Keep in mind health FSA runout periods and forfeitures are also delayed during this period
Claim Procedure Date for Claimants to File An Appeal
Date for Claimants to File A Request for External Review
Date for Claimants to Perfect A Request for External Review

Note: The Joint Notice only extends the claims procedure deadlines for claimants; it does not explicitly extend the date by which a plan administrator has to respond to claims and appeals. However, the plan administrator’s deadlines for issuing such adverse benefit determination on claims and appeals would appear to fall within the general notice and disclosure relief provided by the Disaster Relief Notice.

Additionally, for purposes of group health plan obligations, the Outbreak Period is disregarded for the following:

Date to Provide a COBRA Election Notice

The Joint Notice includes a number of examples to explain how these rules take effect. Each of these examples assumes that the National Emergency ends on April 30, 2020, meaning that the Outbreak Period extends from March 1, 2020 through June 29, 2020, the latter date being 60 days after the National Emergency ends.

With regard to COBRA, one of the listed examples maintains an employee loses group health plan coverage due to a reduction in hours. The COBRA election notice is provided on April 1, 2020. Although typically an individual has 60 days to elect COBRA, here the Outbreak Period is disregarded. Therefore, the 60 day period begins to run on June 29, 2020, so the individual has until August 28, 2020 to elect COBRA.

In another example, an employee was eligible for but declined enrollment in her employer’s group health plan. On March 31, 2020 she gave birth and wants to enroll herself and her child, which is a 30-day HIPAA special enrollment right. The Outbreak Period (again through June 29, 2020 for purposes of these examples) is disregarded, so the 30 day enrollment ends instead on July 29, 2020.

Employers will want to pay close attention to these deadlines as they can have significant administrative and economic impacts. For example, group health plans may have to bear the financial responsibility for continuing premium contributions for months prior to a beneficiary making a COBRA payment. See Example 3:

Example 3 (COBRA premium payments).

(i) Facts. On March 1, 2020, Individual C was receiving COBRA continuation coverage under a group health plan. More than 45 days had passed since Individual C had elected COBRA. Monthly premium payments are due by the first of the month. The plan does not permit qualified beneficiaries longer than the statutory 30-day grace period for making premium payments. Individual C made a timely February payment, but did not make the March payment or any subsequent payments during the Outbreak Period. As of July 1, Individual C has made no premium payments for March, April, May, or June. Does Individual C lose COBRA coverage, and if so for which month(s)?

(ii) Conclusion. In this Example 3, the Outbreak Period is disregarded for purposes of determining whether monthly COBRA premium installment payments are timely. Premium payments made by 30 days after June 29, 2020, which is July 29, 2020, for March, April, May, and June 2020, are timely, and Individual C is entitled to COBRA continuation coverage for these months if she timely makes payment. Under the terms of the COBRA statute, premium payments are timely if made within 30 days from the date they are first due. In calculating the 30-day period, however, the Outbreak Period is disregarded, and payments for March, April, May, and June are all deemed to be timely if they are made within 30 days after the end of the Outbreak Period. Accordingly, premium payments for four months (i.e., March, April, May, and June) are all due by July 29, 2020. Individual C is eligible to receive coverage under the terms of the plan during this interim period even though some or all of Individual C’s premium payments may not be received until July 29, 2020. Since the due dates for Individual C’s premiums would be postponed and Individual C’s payment for premiums would be retroactive during the initial COBRA election period, Individual C’s insurer or plan may not deny coverage, and may make retroactive payments for benefits and services received by the participant during this time.

Importantly, the Joint Notice acknowledges that different geographical regions may have different Outbreak Period end dates. In such case, additional guidance will be issued.

Disaster Relief Notice

In the Disaster Relief Notice, the Department of Labor announced an extension of deadlines for furnishing certain required notices and disclosures to plan participants, beneficiaries and others in order for plan sponsors to meet their ERISA obligations during the coronavirus outbreak.

Participant Disclosures

Subject to the duration limitation in ERISA section 518, an employee benefit plan and the responsible plan fiduciary will not be in violation of ERISA for a failure to timely furnish a notice, disclosure, or document that must be furnished between March 1, 2020, and 60 days after the announced end of the COVID-19 National Emergency, if the plan and responsible fiduciary act in good faith and furnish the notice, disclosure, or document as soon as administratively practicable under the circumstances. Good faith acts include use of electronic alternative means of communicating with plan participants and beneficiaries who the plan fiduciary reasonably believes have effective access to electronic means of communication, including email, text messages, and continuous access websites.

Such notices include Summary Plan Descriptions, Summaries of Material Modifications, benefit determinations, annual funding notices, periodic benefit statements, summary annual reports, participant fee disclosures, QDIA notices, and blackout notices, as long as good faith efforts are made to furnish these documents as soon as administratively practicable. Of note, this Disaster Relief Notice uses the same Outbreak Period as in the Joint Notice.

Employee Pension Benefit Plans

The Disaster Relief Notice also addresses certain items specific to employee pension benefit plans, including:

An ERISA retirement plan’s failure to follow the usual procedural requirements for plan loans and distributions will not be treated as a failure by the DOL, provided that:

The failure is solely attributable to the COVID-19 outbreak;
The plan administrator makes a good-faith diligent effort to comply with ERISA’s procedural requirements;
The plan administrator makes a reasonable attempt to correct any procedural deficiencies as soon as practicable.

The DOL confirmed that it will not treat participant loans as violating ERISA if those loans comply with the increased loan limits and/or suspension of loan repayments provided by the CARES Act, and that it will treat a plan as having been operated in accordance with its terms with respect to certain plan loan and distribution provisions available under the CARES Act if the plan satisfies the conditions for the extended amendment deadline under the CARES Act. This guidance is unsurprising, but appreciated.

The Disaster Relief Notice also indicates that the DOL will not take enforcement action if a plan fiduciary fails to meet the usual deadlines for forwarding participant contributions and loan repayments to a plan during the Outbreak Period, if the failure is solely attributable to the COVID-19 outbreak, provided the employer and/or service provider acts reasonably, prudently, and in the interest of employees to comply as soon as administratively practicable under the circumstances.

Finally, the Disaster Relief Notice specifically confirms that blackout notices are covered by the general good faith relief from notice and disclosure deadlines under ERISA section 518 described earlier, and further provides that a plan fiduciary is not required to make a written determination that the failure to meet the normal 30-day advance notice requirement was due to events beyond the reasonable control of the plan administrator, as a pandemic inherently satisfies that standard.

Form 5500 and Form M-1 Filing Relief

The IRS had previously extended the Form 5500 deadline in certain limited cases related to the COVID-19 pandemic. See IRS Notice 2020-23. Specifically, for filings otherwise due on or after April 1, 2020 and before July 15, 2020 are now due on July 15, 2020. This does NOT apply to calendar year plans as their filings are due July 31, 2020 and are outside the relief period. Presumably, this is because calendar year plans can already obtain an automatic extension of their 2019 Form 5500 deadline until October 15, 2020. However, the guidance indicates that the DOL will continue to monitor the situation and may issue further relief depending on how things unfold.

The Disaster Relief Notice now extends this same relief to Form M-1 filings. Form M-1 is applicable to multiple employer welfare arrangements (MEWAs) and certain other entities required to report for their ERISA group health plans. While Form M-1 is normally due March 1, if an entity had timely requested a 60-day extension, that extended period falls within the relief period and now would be due by July 15, 2020.

General Compliance Guidance

Last, the Disaster Relief Notice provides several points of general ERISA fiduciary compliance guidance during this coronavirus pandemic, notably that:

Plans must act reasonably, prudently, and in the interest of the covered workers and their families who rely on their health, retirement, and other employee benefit plans for their physical and economic wellbeing.
Plan fiduciaries should make reasonable accommodations to prevent the loss of benefits or undue delay in benefits payments.
When the pandemic prevents plans and service providers from fully and timely complying with claims processing and other ERISA requirements, the Department of Labor will emphasize compliance assistance and include grace periods and other relief where appropriate.

Importantly, however, the fiduciary relief provided by the Disaster Relief Notice is generally limited to adoption of nonenforcement positions by the DOL. It does not necessarily restrict a participant’s ability to enforce his or her substantive rights under ERISA.

As you are well aware, the law and guidance are rapidly evolving in this area. Please check with your Fraser Trebilcock attorney for the most recent updates.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

[Client Reminder] October 15 Deadline: Medicare Part D Notice of Creditable (or Non-Creditable Coverage)

Medicare Part D notices (of either creditable or non-creditable coverage) are due for distribution prior to October 15th.

Under the Medicare Modernization Act of 2003, employers who offer prescription drug coverage to any Medicare Part D eligible individuals must notify those individuals whether the offered prescription drug coverage is creditable coverage, meaning whether the coverage is expected to pay on average as much as the standard Medicare prescription drug coverage. Medicare Part D eligible individuals may include active employees, COBRA beneficiaries, retirees, and any of their spouses and dependents. This requirement is applicable to all employers, regardless of size or funding mechanism.

Due to the difficulty in ascertaining what all spouses, dependents, employees, retirees and COBRA beneficiaries may be entitled to Medicare based on age, disability or ESRD, many employers find it easiest to provide a blanket notice of creditable (or non-creditable) coverage to all individuals who are offered the employer’s prescription drug coverage. Medicare Part D notices must be provided to Medicare-eligible individuals prior to October 15th of each year.

The initial notices were due by November 15, 2005 and have been modified numerous times. The newest model notices and guidance were issued for use after April 1, 2011. Therefore, any notices sent from this point forward must conform to the new guidelines. Use of the former model notices will not suffice.

Downloads to the updated guidance (including links on how to determine creditable coverage status) can be found on the CMS website HERE. Downloads to the updated Creditable Coverage Notice and Non-Creditable Coverage Notice (both in English and Spanish) can be found on the CMS website HERE.

As a reminder, there are five instances in which such notice must be provided:

Prior to an individual’s initial enrollment period for Part D;
Prior to the effective date of enrollment in the employer’s prescription drug coverage;
Upon any change in the plan’s creditable status;
Prior to the annual election period for Part D (which begins each October 15); and
Upon the individual’s request.

Providing the notice above is important as a late enrollment penalty will be assessed to those persons who go 63 days or longer without creditable coverage (for example, if they enroll in an employer’s prescription plan which is not as valuable as the Part D coverage instead of enrolling directly in the Medicare Part D coverage).

If the employer’s plan does not offer creditable prescription drug coverage and if the Part D eligible person enrolls in that plan instead of the Part D plan for at least 63 days, a permanent late enrollment penalty of 1% of the premium is added to the Medicare premium for each month the person does not enroll in Part D.

Please contact us if assistance is needed with the Notices of Creditable (or Non-Creditable) Coverage or with questions regarding the method of distribution.

Reminder: Submit Medicare Part D Notice to CMS

As discussed above, group health plans offering prescription drug coverage are required to disclose to all Part D-eligible individuals who are enrolled in or were seeking to enroll in the group health plan coverage whether such coverage was “actuarially equivalent”, i.e., creditable.

The regulations also require group health plan sponsors with Part D eligible individuals to submit a similar notice to the Centers for Medicare and Medicaid Services (“CMS”). Specifically, employers must electronically file these notices each year through the form supplied on the CMS website.

The filing deadline is 60 days following the first day of the plan year.

At a minimum, the Disclosure to CMS Form must be provided to CMS annually and upon the occurrence of certain other events including:

Within 60 days after the beginning date of the plan year for which disclosure is provided;
Within 30 days after termination of the prescription drug plan; and
Within 30 days after any change in creditable status of the prescription drug plan.

The Disclosure to CMS Form must be completed online at the CMS Creditable Coverage Disclosure to CMS Form web page HERE.

The online process is composed of the following three steps:

Enter the Disclosure Information;
Verify and Submit Disclosure Information; and
Receive Submission Confirmation.

The Disclosure to CMS Form requires employers to provide detailed information to CMS including but not limited to, the name of the entity offering coverage, whether the entity has an subsidiaries, the number of benefit options offered, the creditable coverage status of the options offered, the period coverage by the Disclosure to CMS Form, the number of Part D eligible individuals, the date of the notice of creditable coverage, and any change in creditable status.

For more information about this disclosure requirement (instructions for submitting the notice), please see the CMS website for updated guidance HERE.

As with the Part D Notices to Part D Medicare-eligible individuals, while nothing in the regulations prevents a third-party from submitting the notices (such as a TPA or insurer), the ultimate responsibility falls on the plan sponsor.

Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2018 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.

Client Alert: Administering Benefit Coverage During a Leave of Absence – The Necessity of a Leave of Absence Policy

Administering Benefit Coverage During a Leave of Absence – The Necessity of a Leave of Absence Policy

Employee leaves of absence take on various forms, but whether such leaves are provided as a matter of law or pursuant to employer policy, they create unique challenges from a health and welfare benefits compliance standpoint. Indeed, common issues for employers to analyze when employees are absent from work for an extended period of time are whether health and welfare benefit coverage should be continued and, if so, for how long. The answers are contingent upon various factors such as the circumstances surrounding the leaves of absence, the size of the employer, the terms of the applicable plan documents, and the applicability of various federal and state laws. Establishing and implementing a carefully drafted leave of absence policy addressing the provision of benefits is an essential component of benefit administration during a leave of absence.

Implementing a carefully designed leave of absence policy addressing the provision of health and welfare benefits is an easy way for an employer to reduce its risk of employee disputes, discrimination complaints, and financial exposure related to the provision of benefits. However, care needs to be given to such policy’s terms. At the onset, an employer’s policy needs to address what types of leaves of absence are permitted. Federal law mandates that certain employers provide job protected leaves of absence under the Family and Medical Leave Act of 1993 (“FMLA”) and the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”). However, many employers also offer extended leave options for non-qualified and/or extended medical, personal, and/or other various reasons. For each type of permitted leave under an employer’s policy, specific issues related to the provision of benefits need to be addressed. For example, issues related to the provision of benefits that should be addressed within and/or considered in conjunction with an employer’s leave of absence policy include, but are not limited to, the following:

What Benefits are Continued and For How Long? An employer must decide when to cut off eligibility for various benefits for employees on a leave of absence and then draft its policy carefully to carry out its intent. Generally speaking, an employer covered by the FMLA must maintain coverage under any group health plan (as defined under the FMLA) for the duration of a FMLA leave at the level and under the conditions that coverage would have been provided if the employee had continuously employed for the duration of the leave. Similarly, under USERRA, an employer is required to provide certain benefit rights to employees who take a leave of absence for service in the uniformed services. USERRA generally requires an employer to continue to maintain the employee’s health plan (as defined in 20 C.F.R. section 1002.163) benefits for up to 24 months on the same terms and conditions as if the employee was still an active employee during an USERRA qualifying leave. An employer generally has more leeway with respect to determining how long to continue benefits during leaves not subject to the FMLA and USERRA (either because the protected leave has ended or the leave was not protected to begin with) and benefits not required to be continued under the FMLA and USERRA (e.g., life insurance, accidental death and dismemberment, disability, business travel, etc.). However, with respect to major medical coverage, an employer also needs to consider coverage implications under the Patient Protection and Affordable Care Act’s Employer Shared Responsibility Mandate (i.e., Pay or Play).
Has the Insurance/Stop Loss Carrier Agreed to the Continuation of Coverage? Determining how long the insurance company/stop loss carrier has agreed to continue benefits during a leave of absence or other period of time where the employee is not actively working the hours required for eligibility is imperative. Providing coverage that has not been agreed to by the insurance company and/or stop loss carrier can result in substantial exposure through the required self-funding of claims incurred after the carrier refuses to pay due to the participant’s ineligibility. Such financial exposure may be catastrophic to an employer if the claim involves life insurance coverage or massive medical expenses.
What Do the Applicable Plan Documents Say? It is necessary for an employer to review the plan documents (including active at work requirements and hour thresholds) to ensure that an employee remains eligible prior to continuing coverage during a leave of absence. All plan eligibility and participation provisions must be drafted with care to address extended eligibility during a leave of absence. Ambiguity and/or inconsistency between the plan documents and employer policy can lead to participant disputes, litigation, and potential self-funding of claims.
How Will Benefits Be Paid For During the Leave? An employer must address how long any employer contribution towards the cost of coverage will be continued. Additionally, the policy should articulate how the employee needs to pay for his or her portion of the cost of coverage during the leave of absence. The requirements associated with the payment of an employee’s share of the cost of coverage can be particularly tricky if the leave of absence is unpaid. Issues to be addressed include, but are not limited to, the timing of the required payment and whether such payment is made on a pre-tax or after-tax basis. Careful attention needs to be paid to federal laws and regulations, such as those related to Code Section 125 cafeteria plans, FMLA, and USERRA.
When are COBRA Requirements Implicated? A leave of absence is a reduction of hours and is therefore a triggering event that may cause a loss of coverage. COBRA rights may be implicated during a leave of absence if an employee loses eligibility for group health plan coverage. The loss of an employer contribution towards the cost of coverage may also implicate COBRA rights. COBRA requirements need to be carefully analyzed in conjunction with an employer’s benefit structure during a leave of absence to determine whether a qualifying event occurs and, if so, when such event occurs. Failure to timely and accurately provide COBRA continuation rights can result in significant financial ramifications to an employer.

Thus, an employer’s leave of absence policy must be drafted with care taking into account of a plethora of factors. An employer must ensure that it understands when benefits are supposed to end, not only as a matter of its internal company practice, but also as articulated within the applicable plan documents. Ensuring that the employer policy does not create obligations that do not exist within the plan documents is essential. It is equally important for an employer to ensure that it follows the terms of its established leave of absence policy. Deviations from policy terms for one employee can set unintended precedent for future employees. However, case by case analysis may also be required under disability discrimination laws as a leave of absence can also be deemed a reasonable accommodation. Thus, an employer is encouraged to consult with its legal counsel in conjunction with drafting, establishing, implementing, and administering a leave of absence policy.

Attorney Elizabeth Latchana honored among Michigan’s ‘Women in the Law’

When the entire country was seeking to understand and respond to the myriad of employee benefit changes, mandates and associated penalties accompanying the passage of the Patient Protection and Affordable Care Act, Fraser Trebilcock attorney Elizabeth Latchana stepped up to the challenge and became a leading advisor to employers of all sizes across the state of Michigan – and beyond.

“Her dedication to providing clients and the community with the most current information and updates has inspired one of the most active blogs for this legal practice in the state of Michigan,” said Fraser Trebilcock President Brian Morley. “With the proposed changes under the new administration and, for that matter, all future administrations that may aim to continue tweaking or outright changing the laws, Beth’s legal guidance and leadership will be needed for many years to come. We are grateful to have her experience on our side at Fraser.”

Beth found her niche in the transactional health and welfare employee benefits practice just a few years into her legal career. “With the incredible training and assistance of my predecessor and others, I was able to learn, grow, and expand Fraser’s health and welfare employee benefits practice area, sevenfold, and am sincerely honored to have received some accolades along the way,” she says.

Selected in 2015 as “Lawyer of the Year” for Employee Benefits (ERISA) Law in Lansing by Best Lawyers, the Genesee County native has achieved an AV Preeminent peer review rating by Martindale-Hubbell, and continues to be selected by Leading Lawyers and Best Lawyers. Her most recent accolade is selection as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly, and she will be among those honored at a Sept. 7 luncheon in Troy.

When the graduate of Alma College and University of Notre Dame Law School first joined Fraser Trebilcock as an associate, she set a number of goals, from hitting certain billable hour thresholds, to attaining shareholder status, to growing a client base and expanding her practice, to serving on the Board of Directors, all while volunteering in the community and raising a family.

“Nearly 19 years later, I’m happily still a member of the Fraser Trebilcock family, and I’m pleased to say I’ve met each one of my goals,” she says. “I’m proud of my longevity at this great law firm and happy to be of service to it.”

A vice president on Fraser Trebilcock’s Board of Directors, co-chair of the Employee Benefits practice, and an employee benefits coordinator, Latchana became a leading advisor to employers following the passage of the Patient Protection and Affordable Care Act.

She recalls a tip from a senior associate in the early years: make the boss’ job easier. “It led me to focus on working as a team, not just completing a legally correct and hopefully impressively shiny project, but going the extra mile to reach beyond the assignment to simplify the shareholder’s own work,” she says.

“I’ve taken that advice to heart to this day, now with my own clients, helping navigate them through legal hoops and finding creative solutions while ensuring this is done in a way to allow them to focus on what’s most important to them, their own business. I’m able to use creative thought to develop solutions for clients while ensuring they are complying with the plethora of legal mandates thrown at them in the ever-evolving world of employee benefits.”

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The legal industry is one which focuses on serving others, which Beth feels drawn to. Giving of oneself to the assistance and hopefully betterment of others is, she says, what life is all about. “As lawyers, we are held to incredibly high ethical and professional standards, as well as displaying an excellent work ethic. We have been trained this way, and it is ingrained in our very being. Therefore, it’s almost impossible for these standards not to trickle over in one’s personal life and activities, and in all ways we serve.”

With her own legal practice in the health and welfare benefits arena, she is able to use creative thought to develop solutions for clients while ensuring they are complying with the plethora of legal mandates thrown at them in the ever-evolving world of employee benefits. “My goal is serve my clients in a way that allows them to have full confidence in their benefit structure so they can focus on their own business…”

Personally, her practice has enabled her to balance professional life with things she enjoys outside of work. A mother of three, Latchana serves as being a role model for youth and assists her community through activities including participating in alumni career fairs, coaching and managing youth in various recreational sports leagues, assisting with creating a community dog park, organizing and collecting donations for local shelters, or serving in leadership capacities of local non-profit organizations, most recently the Board of Directors for the Food Bank of Eastern Michigan.

And if Beth commits to something, she utilizes those high standards she was taught to ensure the task is completed to the best of her ability, no matter the subject.

Click HERE to sign up to receive updates and alerts on matters related to Employee Benefits Law. You can also learn more about the legal services provided by Beth and our Employee Benefits attorneys, in their own words:

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Updated COBRA Notices & Various Other Matters Addressed in Recent DOL FAQs

Employer-sponsored group health plans have more work to do in conjunction with the requirements of the Patient Protection and Affordable Care Act (“PPACA”). On May 2, 2014, the government released updated COBRA and CHIPRA model notices, proposed COBRA regulations, and a bulletin related to certain special enrollment periods in the exchanges. The government also issued additional frequently asked questions (“FAQs) related to a variety of topics under the PPACA. A general summary of the newly issued guidance is set forth below. Plan sponsors will need to take action in order to comply with this newly issued guidance.

Continue reading Updated COBRA Notices & Various Other Matters Addressed in Recent DOL FAQs