During the State of the Emergency, are employees or employers penalized for issuing COBRA notices at a later time if they are unsure of the nature of the layoff (permanent or temporary)? As it stands today, the current law as written applies. Therefore, COBRA rules apply as they would in any layoff. Should legislation be passed that impacts current law, we will share this news as it occurs.

In the event of a lay-off, how does COBRA / Continuation apply? An employee working less than the hours required for eligibility on the group plan must be offered continuation. It is important to first distinguish whether the group is subject to Federal COBRA, or State continuation rules which differ per state.

The employer may decide to pay for Federal or State continuation. However, they may not discriminate and must pay for all continues, not just select individuals. This policy should be added to the SPD and employee handbook. The employer should clearly advise that an individual who elects COBRA will have to exhaust it before becoming eligible for Individual coverage and will, in essence, be “stuck” until COBRA runs out or the next Open Enrollment. That means they also cannot apply for a subsidy until the next Federal Open Enrollment.

An individual obtaining a subsidy will not harm the employer if the individual is not working. Keep in mind that a small group (1-50 employees) may be subject to Federal FMLA or the Employer Shared Responsibility if they have exactly 50 employees or in NY since small group definition is 1-100 fulltime equivalents. State leave law plans will also need to be considered.

Reference: Savoy Associates