COBRA ARP Subsidy

[Cheryl]

I have an individual client who's employer is stating he voluntarily terminated employment because of job abandonment.  However, he did not abandon his job but left (with the employers permission) on a Tuesday after they refused to pay him a commission on a large deal which violated his employment agreement because he was very upset.  His attorney sent the employer a demand letter the next day requesting how they were changing his prior employment agreement and indicated the employee would be taking vacation days until the employer responded.   The issue is that employer is stating he voluntarily resigned when he didn't and wanted to remain working there but couldn't get them to agree that they were changing his employment agreement.

He elected COBRA, (the employer has less than 20 employees so  it officially falls under the state continuation plan) but without knowing the monthly premium cost.  When he received the amounts($3,400/month for he and his family), he did not proceed with COBRA and didn't make any payments.  He is still within his COBRA eligibility window and therefore submitted his request for treatment as an AEI, but the employer returned it to him denying coverage due to "loss of employment was voluntary".  

The DOL/EBSA cannot assist because they don't have jurisdiction over state continuation plans and his state department of insurance is indicating they can only help with Insurance Company or Agent issues.  

Does anyone have any suggestions on how he can either get this resolved or where he can get legal assistance?  Most of the law firms he has spoken to deal with employers and not individuals so he's at a loss of where to turn.

 

Thanks in advance for your thoughts!

C

[ratherbereading]

The first paragraph is a little confusing ... it sounds like the violation occurred because he was very upset?   I think this question is beyond the scope of this board, but maybe someone else will chime in.  

[Christine Zinter]

According to the IRS FAQ (Notice 2021-31 found at https://irs.gov/pub/irs-drop/n-21-31.pdf, Q24 "An involuntary termination of employment 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 implicit or explicit request, where the employee was willing and able to continue performing services." Q27 also indicates termination for cause is still involuntary termination - so even if the cause was alleged job abandonment, the IRS says that's an involuntary termination.

He should have the lawyer who wrote the first letter about breach of contract follow up with that employer immediately and put them on notice that they will pursue the employer for the full amount of all the COBRA premium subsidy that they are blocking. The attorney should also state that should the employee or his family members have any medical claims for which he has no insurance because of the employer's willful disregard in blocking the subsidy, they will pursue the employer for those expenses as well. I'd copy the Insurance Company and the local Insurance Commissioner's office as well. I know the OIC won't get involved because it's technically not the insurer who is refusing to allow this person the subsidy (as they are taking their queues from the employer), but it affects them as well.

If he's in Oregon or Washington give me a shout, I have my bar license in those 2 states only.