State Mini-COBRA Plans Eligible for Subsidy

Under Title III of the new American Recovery and Reinvestment Act of 2009 (ARRA), “assistance eligible” employees are entitled to a 65% subsidy for COBRA premiums for up to nine months. An assistance eligible employee is one who is (1) eligible for COBRA coverage, (2) elects such coverage, and (3) was involuntarily terminated from employment at any time on or between September 1, 2008 and December 31, 2009.

The Act defines “COBRA continuation coverage” as “coverage provided pursuant to [COBRA] or under a State program that provides comparable continuation coverage.” (emphasis added) It does not include coverage provided through a health flexible spending arrangement under a Section 125 cafeteria plan

The extended COBRA benefits and subsidies under the American Recovery and Reinvestment Act of 2009 do cover employers with fewer than 20 employees who are subject to a State program that provides coverage comparable to COBRA. These programs are are often referred to as “Mini-COBRA” plans.

Some Mini-COBRA plans may not qualify for the subsidy, however. In order to qualify, the insurance provided must be substantially the same as that which the terminated employee enjoyed before termination. In addition, there must be a cap on the premium and the premium must be some percentage of the group premium for active employees. For example, under COBRA the maximum premium is 102% of the active employee premium.

A number of states have short continuation periods, e.g., 6 months. Such programs still qualify for the COBRA subsidy if the premiums comply with the standard set under the ARRA.

If you are an employer with fewer than 20 employees, you should check your state “Mini-COBRA” statute. The majority of states have such a statute. The only exceptions as of this writing are AL, AK, AZ, DE, HI, ID, IN, MI, MT, PA,WA. Legislation is pending in Pennsylvania.

A number of states are either amending their laws or reviewing them in light of the ARRA COBRA provisions. Consequently, employers should monitor state legislation regularly.

Published in: on April 28, 2009 at 10:17 pm  Leave a Comment  
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Americans with Disabilities Act Amendments

On January 1, 2009, the ADA Amendments Act of 2008 became effective. The new statute overturns Supreme Court decisions that narrowly construed the Americans With Disabilities Act, and provides clarification regarding some of the terms in the ADA. Although the final bill represented a compromise between the business community and advocates for disabled persons, the likely effect of the Amendments near term is an increase in the number of claims of disability discrimination and more success by the disabled in asserting their claims.

The following are highlights of the changes in the statute:

Major Life Activities Defined. The ADA defines disability as ” a physical or mental impairment that substantially limits one or more major life activities.” Courts have labored to define “major life activities.” The amendments now define such activities to include caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, and working. The term also includes “the operation of a major bodily function,” including functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions.

Regarded As Having An Impairment. The ADA also defines “disabled” as being “regarded as” having a disability. For example, an employer who discriminates against an employee who has recovered from cancer, may be liable for discrimination for “regarding” the employee as disabled. The amendments broaden the scope of that language, providing that an employee is “regarded as” having a disability if the employee is subjected to discrimination because of an “actual or perceived physical or mental impairment” regardless of whether the disability or impairment limits or is perceived to limit a major life activity.

Mitigating Measures No Longer Considered. The Amendments overturn the controversial decision of the Supreme Court in Sutton v. United Air Lines in which the Court held that in determining whether a person was disabled, courts could consider “mitigating measures” like assistive or prosthetic devices that mitigate the individual’s impairment. Under the new law, the determination of whether an impairment substantially limits a major life activity must be made without consideration of the “ameliorative effects of mitigating measures.”

Restrictions On Definitions Lifted.. In Toyota Motors Mfg. Ky, Inc. v. Williams, the Supreme Court narrowly construed the definition of a disability. The Court held, among other things, that to be “substantially limited” in performing manual tasks, one must have an impairment that prevents or severely restricts him or her from doing activities that are of “central importance to most people’s daily lives.” In addition, the Court noted, the impairment’s impact must be permanent or long-term. The new Amendments require that the term “substantially limits” must be interpreted consistent with the findings and purposes of the amending statute, and expressly rejects the narrow reading of the Court in Toyota Motors. An impairment that substantially limits one major life activity no longer must limit other major life activities in order to be considered a disability. In addition, an impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active.

The statute directs the EEOC to promulgate new regulations consistent with the amended statute.

As with all employment statutes, there is bound to be some abuse in filing charges by unscrupulous employees. However, the amendments are more consistent with Congressional intent articulated in the legislative history of the original statute. The amended statute should not measurably increase the burden on employers, so long as employers have a specific plan or program for reasonably accommodating disabled persons.

In the coming weeks, I will elaborate on the impact of the amendments and keep you updated on how the courts apply them.</span?