Summer 2009
Four Legislative Changes Affect the Group Benefits Business
Recent legislation, including the American Recovery and Reinvestment Act, has a significant impact on certain aspects of the group benefits business. Here are four big ones that could have a significant impact on you and your clients.
1. COBRA
The economic stimulus bill (also known as the American Recovery and Reinvestment Act) provides a nine-month subsidy covering 65 percent of COBRA premiums on medical, dental and vision insurance for people who qualify. This will likely make COBRA a more attractive proposition for eligible workers. Employees involuntarily terminated between Sept. 1, 2008, and enactment of the stimulus bill who declined COBRA coverage will be eligible for a new, special 60-day election period during which they can elect COBRA and be eligible for the subsidy. Entities eligible for subsidy reimbursement (e.g., employers or insurers providing coverage under an insured plan) typically would recoup the 65 percent premium payment from the government by claiming a credit against their income and payroll tax liability.
2. ADA Definition of Disability Change
The ADA Amendments Act changed federal law by significantly broadening the definition of disability. Starting Jan.1, many more people are entitled to the protection of the Americans with Disabilities Act (ADA). The practical effect of these changes is that employers are now required to focus on determining only two things:
- The essential functions of each job
- Which requested accommodations are reasonable and which are not
One key part of the ADA that remains unchanged is that employers do not need to reassign or omit any essential function as an accommodation.
3. Tax Credits
The “Making Work Pay” tax credit, included in the economic stimulus bill, will put an extra $13 or so a week in the average worker's pocket from April through the end of 2009. This could be an opportunity to sell more voluntary coverages in a tough sales environment.
4. FMLA Changes
Some of the most sweeping changes to the Family and Medical Leave Act (FMLA) to date went into effect Jan. 16. New obligations for employers include a requirement to post a new General Notice that provides information on how to file a complaint with the Department of Labor (DOL).
Employers are also required to give three other notices directly to an employee who requests family or medical leave:
- Eligibility Notice that lets employees know if they are eligible to take leave under the FMLA (e.g., if they have met the requisite number of hours)
- Rights and Responsibilities Notice
- Designation Notice that tells the employee whether the reason and documentation provided for the leave qualifies them for protections under the FMLA
In addition, employers should note the creation of new leave entitlements for certain military family members:
- Up to 12 weeks qualifying exigency leave to handle issues created when a family member is called to active duty
- Up to 26 weeks leave to care for a family member who suffers a serious illness or injury while on active duty