Pennsylvania Mini-COBRA 

SUMMARY OF NEW PROVISIONS 
On June 10, 2009, Governor Ed Rendell signed new legislation that will expand the COBRA legislation to small employers.  Pennsylvania employers with 2-19 employees will be required to offer COBRA coverage to terminated employees.  Pennsylvania mini-COBRA takes effect on July 10, 2009.  
  
WHO DOES THIS AFFECT
Pennsylvania's mini-COBRA law applies to employers that have 2 to 19 employees.  Employees working for an employer of this size will now be eligible for state mandated COBRA benefits as of July 10, 2009. 
 
To be eligible, employees must 1) have been covered under the employer's insurance plan for the three months prior to termination, 2) not be eligible for Medicare, and 3) not eligible for, or covered by, other private, group health insurance.   
 
The new legislation adopted federal guidelines for determining a qualifying event (e.g. termination of employment, reduction of hours, divorce).
 
While the new "mini" COBRA legislation will resemble federal COBRA legislation, there are several key differences:  

♦     Continuation coverage is only available for up to 9 months under mini-COBRA.  (Federal COBRA applies for 18-36 months depending on the situation.)     

♦     COBRA beneficiaries may be charged up to 105% of the premium charged to the employer.  (Federal COBRA allows up to a 102% charge of the premium.)

♦     Mini COBRA is imposed on insurers, requiring the insurers to notify existing policyholders of the new law by July 25, 2009.  (However, employers are still responsible for administering COBRA.)  

♦     Terminated employees have 30 days to elect coverage.  (Federal COBRA provides for up to 60 days to elect coverage.)
 
Additionally, eligible employees who are involuntarily terminated as defined by the American Recovery and Reinvestment Act of 2009 (ARRA) will also be eligible for the 65% COBRA premium subsidy.
  
WHAT YOU NEED TO DO NOW
Employers with 2 to 19 employees will need to take several steps to ensure they are prepared to administer COBRA.  While the PA COBRA administration requirements are unclear at this time, our recommendation is to follow suit with federal COBRA administration practices until further direction is provided. 
 
The insurance carriers are responsible for mailing out COBRA notices to employees of small employers notifying employees of COBRA availability.  However, employers will now be required to send out COBRA Election Notices (also known as a General Notice).  It is recommended that this letter be sent out as quickly as possible after termination in order to provide the employee time to consider COBRA within their 30 day election window.  A Model Notice has been published by the US Department Labor.  Employers will need to customize this notice for their insurance plans, COBRA premiums and federal subsidy if applicable.    
 
Employers will also want to develop a tracking system in order to track COBRA participants, mailing and cost.  For employers that use a payroll administrator, you will want to talk them about tracking COBRA in order to receive the 65% subsidy reimbursement on your quarterly payroll taxes.  If you run payroll in-house, you will want to fully understand ARRA and develop a tracking mechanism that complies with ARRA requirements in order to claim the subsidy reimbursement.
 
It is unclear of whether there will be penalties on employers that do not comply with the new PA COBRA requirements. 
 
As details of the new law become clear, we will provide you with updates to assist you with complying under the new regulations.

Genetic Information Nondiscrimination Act (GINA) Update

SUMMARY OF NEW PROVISIONS
The Genetic Information Nondiscrimination Act of 2008, also referred to as GINA, is a new federal law that protects Americans from being treated unfairly because of differences in their DNA that may affect their health.  The President signed the act into federal law on May 21, 2008.
 
WHO DOES THIS AFFECT
The new law prevents discrimination from both health insurers and employers.  Health insurers are prohibited from restricting enrollment or adjusting premiums on the basis of genetic information.  Employers are prohibited from failing or refusing to hire or discharge an employee because of genetic information of the employee or their family members.  The parts of the law relating to health insurers took effect in May 2009, and those relating to employers will take effect by November 2009.
 
WHAT YOU NEED TO DO NOW
Although most employers are already aware of the sensitivity of genetic information and are in compliance, they should review their health plan and employment practices to ensure they are not inappropriately requesting or receiving genetic information about employees or their family members.  Employers that possess genetic information must maintain it on separate forms in separate files and treat it as a confidential medical record, consistent with ADA standards.  Employers may not disclose genetic information except to the employee upon written request, health researchers, in response to a court order, to a government official investigating a GINA complaint, or for FMLA or state leave law purposes to a public health agency.  Employers can also expect that they will have to post notices about GINA in the workplace, just as they do with other employment laws.

Pennsylvania Health Insurance Continuation for Adult Children Up to Age 30 

SUMMARY OF NEW PROVISIONS
Health insurers operating in Pennsylvania will soon be required to offer adult child health insurance to Pennsylvania employers.  The employer will have the option of expanding health insurance coverage to adult dependents of employees.  This would allow adult dependents to remain on the parent's health insurance coverage through age 29.
 
WHO DOES THIS AFFECT
All employers in Pennsylvania that provide health insurance benefits to employees may offer the new coverage to their employees.  The choice of an employer to offer the additional coverage is completely optional.  However, insurers are required to offer the option to PA employers as of the contract or renewal date of each employer's plan, after December 7, 2009 (or 180 days from the date the new legislation was signed).  Employers that self-fund their plans are exempt due to a provision in the Employee Retirement Income Security Act (ERISA).   
 
In order for an adult dependent to be eligible under the parent employee's plan, all of the following conditions must be met.  The adult child
♦     Must not be married;
♦     Must not have dependents;
♦     Must Reside in PA or be enrolled as a full time student at an institution of 

       higher learning in another state;
♦     Must not have other private insurance coverage; and,
♦     Must not be enrolled in or be eligible for government benefits.

Additionally, the law allows the insurers to adjust their rates and charge a higher premium for coverage of an adult child. 
 

WHAT YOU NEED TO DO NOW
This option is available to employers whose contracts begin or renew after December 7, 2009 (or thereabouts).  Begin speaking with your broker or health insurance carrier now to understand how this will be administered, what the potential cost will be, what steps need to be taken if you do want to offer this option to your employees and how you will structure the cost for your employees.      
 
The law applies to new health contracts and renewals occurring 180 days after the signing of the new legislation (June 10, 2009) and on a rolling basis moving forward.  For example, if a contract is eligible for renewal on December 15, 2009, the new provision will be established at that time.  However, if a contract is not up for renewal until April 2010, the provision will not take effect until that time.  The provision becomes effective with a new contract or renewal, as long as it is 180 days after the signing of the legislation.

Federal Minimum Wage Increase

SUMMARY OF NEW PROVISIONS

The Fair Labor Standards Act (FLSA) regulates minimum wage and classification of employees for pay purposes. The federal minimum wage will be increased to $7.25 per hour effective July 24, 2009. Many states also have minimum wage laws. Some state laws provide greater employee protections; employers must comply with both.
 
WHO DOES THIS AFFECT
The Fair Labor Standards Act (FLSA) affects most private and public employment. The FLSA requires employers to pay covered non-exempt employees at least the federal minimum wage and overtime pay for all hours worked over 40 in a work week.

The Act exempts some employees from both overtime pay and minimum wage provisions, and it also exempts certain employees from the overtime pay provisions alone. Because the exemptions are narrowly defined, employers should check the exact terms and conditions for each by contacting their local Wage and Hour Division office within the Department of Labor's Employment Standards Administration (ESA).
 
WHAT YOU NEED TO DO NOW
Most importantly, employers should determine which, if any, employees are below the new minimum wage requirement.  Employers should then adjust pay for those employees accordingly in order to comply with the new regulation.  It is also recommended that employers provide notification to affected employees.

Every employer of employees subject to the Fair Labor Standards Act's minimum wage provisions must post, and keep posted, a notice explaining the Act in a conspicuous place in all of their establishments so as to permit employees to readily read it. The content of the notice is prescribed by the Wage and Hour Division of the Department of Labor. An approved copy of the minimum wage poster is made available for informational purposes or for employers to use as posters.