New COBRA subsidy available in cases of ‘involuntary termination’: What does that mean?

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in Firing,Human Resources

By Tim Stanton and Brian D. Black, Esqs.

Under the massive new federal economic stimulus law, the American Recovery and Reinvestment Act of 2009 (ARRA), employees who suffer an “involuntary termination” have to pay just 35% of the cost of COBRA continuation health care coverage. Employers cover the rest and then the government reimburses them. This relates to terminations between Sept. 1, 2008, and Jan. 1, 2010.

But what does “involuntary termination” mean?

Under a recent IRS ruling, an “involuntary termination” would include certain employee-initiated “good reason” terminations, layoffs with recall rights and even certain cases where employees took severance buyouts. (IRS Notice 2009-27)

The IRS notice says an involuntary termination “means a severance from employment due to the independent exercise of the unilateral authority of the employer to terminate the employment, other than due to the employee’s impli...(register to read more)

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