Labor Employment Law Blog

On March 30, 2010, President Obama signed into law the Health Care and Education Reconciliation Act of 2010 ("Health Care Act"), which amended the Patient Protection and Affordable Care Act ("Patient Protection Act") that was signed into law only a few days prior on March 23, 2010. The Health Care Act contained provisions proposed by President Obama and requested by various members of Congress after the Patient Protection Act had already been passed by Senate in December 2009. This new law, which was designed to provide coverage to millions of Americans who are uninsured or underinsured, makes broad changes to the nation's health care system, and will have both an immediate and long-term impact on employers and their benefit plans. Below is a brief overview of important aspects of the law which will affect employers in the next year as well as certain other provisions with later effective dates.

On March 2, 2010, President Obama signed into law legislation that extends the Federal government's COBRA premium subsidy program. The new legislation extends the subsidy program until March 31, 2010, retroactive to March 1, 2010. Currently, the Federal government is subsidizing the cost of COBRA continuation coverage for certain individuals that experience a loss of coverage under employer-sponsored health plans due to an involuntary termination. Previously, only employees who were terminated prior to February 28, 2010 were eligible for the subsidy. Pursuant to this recent extension, employees who are involuntarily terminated between March 1, 2010 and March 31, 2010 will also be eligible for the subsidy.

The American Recovery and Reinvestment Act of 2009 ("ARRA"), which President Obama signed into law on February 17, 2009, created a federal subsidy of the premiums payable by certain terminated employees for continuation coverage provided under employer-sponsored group health plans pursuant to the requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (also known as "COBRA"). The premium subsidy and new notification requirements under COBRA that apply to employers and plan administrators as a result of this legislation are summarized below.

The Second Circuit's ruling in Westrec Marina Management v. Arrowood Indemnity Co. is a warning to employers to report potential claims to their insurance carrier as soon as possible or face denial of coverage.  In Westrec, an employee filed a charge of discrimination against Westrec with the California Department of Fair Employment and Housing (DFEH) and requested an immediate right to sue letter.  Subsequently, her attorney sent a demand letter to Westrec asserting claims and seeking possible early settlement prior to filing a lawsuit.  At the time of the letter, Westrec failed to inform its insurer, Arrowood, of the claim.  The employee later filed a civil action, and when Westrec tendered the claim, Arrowood denied coverage.