HRACI Legislative Update
Additional Updates can be found at the Indiana SHRM website, and the SHRM national website.

March 2009
Submitted by: Michael Padgett, HRACI Director of Legislative Affairs

Stimulus Bill Brings Significant COBRA Changes

The recently-enacted American Recovery and Reinvestment Act of 2009 (otherwise known as the “Stimulus Bill”) makes significant changes to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) that will affect every employer that sponsors a group health plan for employees and has terminated or laid off an employee on or after September 1, 2008. These amendments create additional COBRA notice requirements and affect payroll tax administration in order to administer a temporary federal subsidy of COBRA premiums. Employers will have to act quickly to implement the new requirements, which will include locating certain former employees and coordinating payroll and COBRA administration.

Under the Act, for COBRA coverage periods beginning on or after the date the Act is signed into law, “assistance eligible individuals” will be required to pay 35% of the applicable COBRA premium. Employers will need to cover the remaining 65% of the premiums until reimbursement can be requested from the federal government. Employers that provide coverage through insurance or self-insurance will be able to obtain reimbursement of the 65% premium subsidy as a credit against their quarterly federal employment tax filings. The language of the Act suggests the subsidy would apply regardless of the level of coverage (single, single plus one, family, etc.). Individuals who are or were otherwise eligible for COBRA continuation coverage, who lost coverage under their employer-sponsored group health plan due to an involuntary termination of employment between September 1, 2008 and December 31, 2009, AND who elect COBRA continuation coverage are “assistance eligible individuals” under the Act. Additionally, Congress recognized that many individuals who were recently terminated may have declined to elect COBRA continuation coverage because of its cost. Accordingly, the Act requires employers to locate former employees who previously declined COBRA and provide notice of the right to COBRA coverage with the government subsidy.

Generally, the subsidy is available for up to 9 months, but can end sooner, such as when the maximum continuation coverage period under COBRA expires. (The statute does not extend the maximum COBRA continuation coverage periods.) Additionally, the subsidy will cease to be available for COBRA coverage following the date an assistance eligible individual becomes eligible for: (1) coverage under any other group health plan (other than one consisting only of dental, vision, counseling or referral services); (2) coverage under a health flexible spending account plan; (3) coverage of treatment at certain employer on-site facilities; or (4) Medicare or Medicaid.

This bulletin only provides a general overview of the COBRA changes made in the Stimulus Bill. Covered employers are strongly encouraged to follow up on their obligations with regard to this temporary notice and subsidy requirement.

February 2009
Submitted by: Michael Padgett, HRACI Director of Legislative Affairs

On January 29, 2009, President Obama signed into law The Lilly Ledbetter Fair Pay Act. The Act overturns the Supreme Court’s 5-4 decision in Ledbetter v. Goodyear Tire & Rubber Co. issued in 2007. In the controversial Ledbetter case, the Supreme Court held that the time limit for filing pay discrimination claims with the Equal Employment Opportunity Commission (EEOC) is measured from the date of the first allegedly discriminatory pay decision. The Act amends Title VII of the Civil Rights Act of 1964 to provide that the charge-filing period (300 days in most states, including Indiana) would commence when the employee is affected by an application of a discriminatory compensation decision or practice (including each time wages are paid). In other words, the time period for filing a claim can be measured based on each successive pay period, rather than the original decision setting wage levels. The Ledbetter Fair Pay Act will result in employers losing a statute of limitations defense in many cases and breathe new life into old claims.

January 2009
Submitted by: Michael Padgett, HRACI Director of Legislative Affairs

As we enter the New Year, there are several legislative initiatives receiving a great deal of attention from human resources professionals. These primarily include proposed or enacted changes to labor and employment laws at the federal level. However, one issue that has not received as much attention has come to the forefront at the state level and requires immediate attention.

Indiana’s Unemployment Insurance Trust Fund has dipped to dangerously low levels recently and requires an immediate infusion of revenue in order to remain solvent. The problem is only compounded by the increasing number of unemployment compensation claims received by the Indiana Department of Workforce Development. The Fund recently borrowed $145 million from the federal government in order to keep up with its obligations to pay unemployment claims.

In order to address this issue, the Governor appointed an ad hoc committee comprised of employer, labor and governmental representatives to craft a plan to present to the Indiana General Assembly. It appears that the committee is reviewing all possible options, including increasing unemployment taxes on employers, adjusting benefit levels, and others. Employers will want to watch this issue closely and work through their representatives to ensure their voices are heard. Additionally, employers should place renewed focus on handling of unemployment claims and related issues, as overall costs of the program may be on the rise.