Strategies for Avoiding Litigation Over COBRA Notices
Employers are seeing an increase in lawsuits from former employees alleging deficient Consolidated Omnibus Budget Reconciliation Act (COBRA) election notices. These lawsuits are generally class actions and can result in significant attorneys’ fee awards for successful ex-employees. Understanding current COBRA notice regulations and litigation trends can help employers stay compliant and avoid costly lawsuits.
What Is a COBRA Notice?
Most employer-sponsored group health plans must comply with the Employee Retirement Income Security Act (ERISA), which establishes standards for protecting employee benefits. One protection established by ERISA is an employee’s right to continued health insurance coverage under COBRA.
COBRA allows former employees and their families to continue their health insurance for a limited time after a qualifying event. Qualifying events include:
- Termination of employment
- Reduction of work hours for reasons other than misconduct
- Death
- Medicare eligibility
- Divorce
- A child’s loss of dependent status
Employers must provide former employees with notice that they may elect to continue their health coverage.
Download the Entire PDF Below:
Affordability Percentages Will Decrease for 2022
Decrease for 2022
On Aug. 30, 2021, the IRS issued Revenue Procedure 2021-36 to index the contribution percentages in 2022 for determining affordability of an employer’s plan under the Affordable Care Act (ACA).
For plan years beginning in 2022, employer-sponsored coverage will be considered affordable if the employee’s required contribution for self-only coverage does not exceed:
- 9.61% of the employee’s household income for the year for purposes of both the pay or play rules and premium tax credit eligibility; and
- 8.09% of the employee’s household income for the year for purposes of an individual mandate exemption (adjusted under separate guidance). Although this penalty was reduced to zero in 2019, some individuals may need to claim an exemption for other purposes.
Read more by downloading our ACA Compliance Overview below:
HR Compliance Overview: The Family and Medical Leave Act (FMLA)
This Compliance Overview provides a summary of the Family and Medical Leave Act (FMLA).
The Family and Medical Leave Act (FMLA) is a federal law that provides eligible employees of covered employers with unpaid, job-protected leave for specified family and medical reasons. Under the FMLA, eligible employees may take leave for their own serious health conditions, for the serious health conditions of family members, to bond with newborns or newly adopted children or for certain military family reasons.
In addition to providing eligible employees with an entitlement to leave, the FMLA requires that employers maintain employees’ health benefits during leave and restore employees to their same or equivalent job positions after leave ends. The FMLA also sets requirements for notices, by both the employee and the employer, and provides employers with the right to require certification of the need for FMLA leave in certain circumstances.
The FMLA is enforced by the Department of Labor (DOL).
Download full document below:
Pennsylvania Compliance Bulletin: May 2021
HSA/HDHP Limits Increase for 2022
On May 10, 2021, the IRS released Revenue Procedure 2021-25 to provide the inflation-adjusted limits for health savings accounts (HSAs) and high deductible health plans (HDHPs) for 2022. The IRS is required to publish these limits by June 1 of each year. These limits include:
- The maximum HSA contribution limit;
- The minimum deductible amount for HDHPs; and
- The maximum out-of-pocket expense limit for HDHPs.
These limits vary based on whether an individual has self-only or family coverage under an HDHP.
Eligible individuals with self-only HDHP coverage will be able to contribute $3,650 to their HSAs for 2022, up from $3,600 for 2021. Eligible individuals with family HDHP coverage will be able to contribute $7,300 to their HSAs for 2022, up from $7,200 for 2021. Individuals who are age 55 or older are permitted to make an additional $1,000 “catch-up” contribution to their HSAs.
The minimum deductible amount for HDHPs remains the same for 2022 plan years ($1,400 for self-only coverage and $2,800 for family coverage). However, the HDHP maximum out-of-pocket expense limit increases to $7,050 for self-only coverage and $14,100 for family coverage.
Employers that sponsor HDHPs should review their plan’s cost-sharing limits (minimum deductibles and maximum out-of-pocket expense limit) when preparing for the plan year beginning in 2022. Also, employers that allow employees to make pre-tax HSA contributions should update their plan communications for the increased contribution limits.
Download entire bulletin below: