Compliance Matters
COBRA Deadline Looms as Congress Mulls More
Changes That Could Greatly Impact Employers

As the April 18 deadline fast approaches, many employers are rushing to comply with the new COBRA notice regulations. Yet even before the quandary over COBRA has cooled, new proposals in Washington are emerging that could further complicate employers’ compliance efforts.

Employers must issue notices informing some former employees of the 65 percent federal premium subsidy, which was passed as part of the American Recovery and Reinvestment Act of 2009. Only employees who were “involuntarily terminated” between Sept. 1, 2008, and Dec. 31, 2009, are eligible to receive the subsidy. However, the government stipulates that all “qualified beneficiaries,” not just those who were involuntarily terminated, must receive the notices. View the notices: http://www.dol.gov/ebsa/COBRAmodelnotice.html.

Earlier this month, the IRS released guidance clarifying the definition of an “involuntary termination.” The IRS defines it as “the independent exercise of an employer’s authority to terminate employment when the employee was willing and able to work,” according to a report in Business Insurance. View the guidance: http://www.businessinsurance.com/images/random/files/COBRA_Notice2009-27.pdf.

While employers grapple with the new COBRA requirements, other topics are brewing in Congress that could soon create new compliance challenges and more costs for employers.

A new bill introduced by four House Democrats would widen the Family and Medical Leave Act (FMLA) to include 12 weeks of paid leave. FMLA already experienced an expansion this year when Congress passed a bill that extends benefits to families of injured military personnel.

According to the bill, the expansion would be financed through a new trust that would be equally funded by employers and employees, who would each contribute 0.2 percent of an employee’s pay.

Support for limiting the tax exclusion on employee benefits is also gaining some steam, according to the Employee Benefit Research Institute. Although no formal bill has been introduced, the idea has bipartisan support in Congress.

While workers certainly would be affected by such a move, many employers would wind up paying new administrative costs. Employers who purchase insurance and pay a premium would simply have to report the premium amount above a specified cap on employees’ W-2 forms. However, this tax limit would force self-insured employers to do more leg work because they would need to determine the true value of the benefits to report for income-tax purposes, which likely would take time and incur costs.



Employee Benefits Outlook
Most Employers Stick to Their Overall Benefits Plan

Although reports of large corporations threatening to slash health care benefits and the company 401(k) match are becoming more common, small and mid-size companies are sticking with their benefits packages and expect to do so in the future, according to a recent report.

The study by LIMRA found that only 2 percent of employers surveyed had dropped a group insurance, health care or retirement benefit within the past 12 months.

Although the recession is pressuring businesses to cut costs, most employers said they plan to stay the course with their employee benefits, according to the LIMRA study. Only 5 percent of employers who have a 401(k) company match said they expect to alter that benefit in the next 12 months, and a mere 3 percent of respondents said they planned to drop a group insurance or health care benefit.

Employers seem particularly protective of their wellness programs. A recent survey by Buck Consulting found 87 percent of respondents said creating a corporate culture that supports healthy lifestyle choices is a priority, and 65 percent they already had moderate or extensive wellness programs in place.

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• SAME-SEX MARRIAGE: An Iowa court has ruled the state’s ban on same-sex marriages is unconstitutional. This might affect employers nationwide because the state doesn’t require proof of residency in order to obtain a marriage license. Iowa joins Vermont, Massachusetts and Connecticut as states that have legalized same-sex marriages.