On April 15, 2010, President Obama signed H.R. 4851, known as the "Continuing Extension Act of 2010" into law. The Act included an extension of unemployment benefits as well as an extension and improvement of premium assistance for COBRA benefits. The extension of COBRA benefits is effective immediately and retroactive to April 1, 2010.

Prior to the enactment of this bill, COBRA premium assistance was not available to anyone terminated after March 31, 2010 due to the expiration of the previous extensions. This most recent extension will immediately allow those who experience one of two types of qualifying events to be considered an assistance-eligible individual for purposes of the COBRA premium assistance. The first qualifying event is an involuntary termination of employment through May 31, 2010. The second qualifying event is a reduction in hours followed by an involuntary termination of employment if that involuntary termination occurs on or after March 2, 2010, and on or before May 31, 2010.

Although the Act was not passed until April 15, 2010, the legislation includes language for retroactive eligibility for those who experienced an involuntary termination of employment on or after April 1, 2010.

As with previous extensions, those who are assistance eligible individuals will be eligible for up to 15 months of reduced premiums.

If the Department of Labor provides revised Model Notices reflecting this newest extension, we ill update you with the necessary information.

Effective this year, the PPACA, as amended by the Health Care and Education Reconciliation Act, provides small businesses with a tax credit regarding employee health coverage. Employers are eligible if they have fewer than 25 employees, an average annual wage less than $50,000 and the employer contributes at least 50 percent of the total premium cost or a benchmark premium. The Internal Revenue Service has provided additional guidance on their website regarding the credit including frequently asked questions and example calculations. The FAQs clarify that individuals treated as self employed (partners in a partnership, sole proprietor, more than 2 percent S-corp owner, or more than 5 percent owners) are not included in the calculation to determine the employer's number of employees or average annual wage.

The Department of Labor (DOL) has created a new webpage that contains links to a variety of resources relating to the major health care reform legislation, PPACA. The webpage includes helpful links as well as a summary, timeline, and employer help guide:

• Summary - Includes nine categories with key points of interest under each subheading.
• Implementation Timeline - Groups by year the many components of health care reform that will become effective and provides a brief description of each one.
• Employers and Health Reform - Broken down by "small employers," "larger employers," and "all employers," it lists health care reform items that are relevant to the named employer group.

The White House has released a Fact Sheet regarding the Reinsurance Program for Early Retirees. The paper provides information about the federal reinsurance program that will be available for employers sponsoring health plans for retirees over 55 years of age who are not eligible for Medicare. The program will reimburse employers for 80 percent of claims incurred from $15,000 up to $90,000 for retirees, their spouses and dependents. The fact sheet clarifies that the reinsurance payments are excludable from taxable income. The application for the program will be available in June.

Under PPACA, children under age 19 may not have a pre-existing condition exclusion applied to their coverage for plan years beginning on or after Sept. 23, 2010. However, policies are not required to be guaranteed issue until 2014. This meant that an insurance carrier in the individual market could still outright deny a child's application for coverage until 2014. On March 29, 2010, US Department of Health and Human Services (HHS) Secretary Kathleen Sebelius issued a statement indicating that was not the intention of the law's language and that future regulations issued by HHS would clarify this. She states, "I am preparing to issue regulations in the weeks ahead ensuring that the term 'pre-existing condition exclusion' applies to both a child's access to a plan and to his or her benefits once he or she is in the plan."

On March 26, 2010, the Chief Council of the IRS released Chief Counsel Advice No. 201012060. If an employee's reimbursements from the health FSA exceed his or contributions to the health FSA at the time of lay-off or termination, the employer cannot recoup the difference from the employee. Though neither the previously proposed regulations nor the current health FSA regulations stated explicitly that such recoupment is not permitted, it has long been understood in the industry as a violation of the uniform coverage rule. An attempt to recoup excessive distributions would be considered a violation of the uniform coverage rule and could result in the loss of favorable tax status for the benefits paid under the health FSA.

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The case of Olvera v. Sierra Nevada Coll., 2010 WL 185950 (D. Nev. 2010) involved an employee who had moved and accused the plan administrator, who was also the employer, of not providing a timely COBRA Election Notice following her termination of employment. The employer's third-party administrator (TPA) had proof that the Election Notice was mailed to the employee's last known address. The court concurred that the Election Notice was deemed to have been sent and the plan administrator is not required to show that the former employee had actually received the notice. This case reinforces that as long as there is proof that the Notice was mailed in a manner "reasonably calculated to ensure actual receipt of the material," as written in the regulations, the plan administrator may assume that the Notice was received.

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The IRS recently released the Spring 2010 edition of the Employee Plans Newsletter. The newsletter contains a number of pertinent articles, citations and links related to retirement plans including:

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