Seyfarth Synopsis: While Mr. Sinatra could get away with doing things his way, California law requires that employers provide employees facing the final curtain with specific paperwork and a check on their final day. Although these various items may seem simple, failure to correctly provide them can lead to more than a few regrets for
Emergency legislation promises to revitalize the California economy and place our state in the forefront of jurisdictions promoting economic growth and employment opportunity.
The California’s Open for Business—Really!—Act (“COBRA”), AB 666, effective April 1, works the following reforms in California employment law.
PAGA repeal. Article I of COBRA repeals the…
California legislators and regulators continue their efforts to expand employee protections, and the IRS permits a temporary subsidy for separating employees who want to sample the small business exchanges for health care. Read on for highlights.
San Francisco Retail Workers Bill Of Rights Redux: The State Legislature Is Cooking Up Trouble Outside …
Post-termination medical coverage costs can be a powerful inducement for some employees losing their jobs to sign a separation agreement releasing legal claims. In the past, it has been common for employers to offer to pay all or part of the ex-employee’s COBRA premium for a fixed period of time, such as 3 months. With the Affordable Care Act and Covered California (the Golden State’s insurance marketplace) now part of the landscape, there are more options—but more complications.
Coverage through Covered California can be much less expensive than COBRA. But, there are key differences between traditional COBRA and Covered California that both ex-employees (making coverage choices) and employers (drafting separation agreements) should consider. Moreover, the Affordable Care Act prohibits, in almost every circumstance, employers from reimbursing employees for individual insurance premiums (for policies issued through Covered California or otherwise). Thus, an employer wishing to include payment for continued medical coverage as part of a severance package must consider whether it is willing to offer (i) payment or reimbursement for COBRA, or (ii) an unconditional cash payment that the employee can choose to apply to the cost of Covered California, or COBRA, or some other non-health care related purpose.
So how do the Affordable Care Act and Covered California impact separation agreements with a traditional COBRA reimbursement or subsidy feature? Unlike some states, California embraced healthcare reform. California’s insurance exchange, Covered California, is on line, in storefronts and functioning. Anecdotally, paying for Covered California is potentially much cheaper than paying an ex-employee’s COBRA premium. (Both COBRA and Covered California plans qualify as coverage for avoiding the new tax penalties for failing to purchase coverage at all.)
But comparing COBRA to Covered California is like comparing a Washington apple to a California orange, especially when you are talking about potential gaps in coverage. This is virtually impossible to avoid when the event that triggers special enrollment in Covered California is loss of employer coverage. Consider the following:…