Beware the Snake in the Grass: COBRA Election Notice Considerations During The COVID-19 Pandemic

With most of the nation on lockdown due to the COVID-19 pandemic, many employers are in the unfortunate position of having to lay off workers or significantly reduce their hours. If these workers also lose employer-sponsored health coverage, they will experience a “qualifying event” under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), triggering the requirement to send COBRA election notices describing the employee’s (and spouse’s) right to elect to temporarily stay on their employer’s health plan. In these difficult times, employers should review their notices to ensure they are compliant with COBRA and provide adequate information to employees. Compliance is especially important because COBRA notices have become the subject of a growing trend of class action lawsuits filed by ex-employees alleging that their former employers did not provide sufficient notice of their COBRA rights.

Generally, COBRA requires notices to be drafted in a manner that the average plan participant can understand, and must provide specifics about continuation coverage, such as the contact information for the administrator, how to elect coverage, and how much coverage costs. The DOL has issued model notice letters to help employers meet these requirements.

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Congress (Finally) Passes the SECURE Act

After a delay of several months, Congress passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act, clearing the way for one of the most substantial pieces of retirement plan legislation in years to become law.

The House of Representatives initially passed the SECURE Act in May by an overwhelming 417−3 vote. Although the Act was set for easy bipartisan passage, it foundered in the Senate. The bill found new life at the eleventh hour of the 2019 legislative session as an attachment to the must-pass $1.4 trillion spending bill, which passed by significant margins.

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AAA Amends Withdrawal Liability Arbitration Rules to Obtain PBGC Approval

The American Arbitration Association (AAA) significantly altered its rules for multiemployer pension plan arbitrations to respond to Pension Benefit Guaranty Board (PBGC) concerns and public comments regarding recent fee increases and the selection of arbitrators. Today, the PBGC published a Notice of Approval of AAA’s application of its amended rules. Click here for our alert on the changes, which discusses the welcome relief these amended rules provide employers who wish to challenge withdrawal liability assessments and the impact on arbitrating assessments between multiemployer plans and employers.

In with a Bang and Out with a Whimper: Second Circuit Challenge to Popular Withdrawal Liability Calculation Method Settles

The withdrawal liability case of the year came to an anticlimactic end on Monday, September 16, 2019, as the Second Circuit docket sheet of New York Times Company v. Newspaper and Mail Deliverers’ Publishers’ Pension Fund pinged to life with a stipulation withdrawing the case with prejudice.

The most-watched issue in the case was a challenge to the Segal Blend discount rate assumption used by many multiemployer pension plans to calculate employer withdrawal liability. The discount rate assumption can have a massive effect on an employer’s withdrawal liability as even a small variation can dramatically increase a withdrawal calculation.

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