What constitutes an “involuntary termination” of employment for purposes of determining an individuals eligibility for premium assistance?
ARRA does not define an “involuntary termination,” although the term is understood to exclude termination for gross misconduct since an employee so terminated is not eligible for COBRA coverage. FAQs released by the House Ways and Means Committee have further clarified that involuntary termination must be at the “direction of the employer,” meaning that death, while involuntary, is not considered an involuntary termination for purposes of premium assistance. Loss of coverage due to a reduction in hours of employment does not qualify as an “involuntary termination,” although it is a COBRA qualifying event. Informal guidance from the DOL has indicated that loss of coverage due to a reduction of hours, even when followed by a planned, subsequent involuntary termination of employment, does not qualify as an “involuntary termination” under ARRA. Additional guidance on what constitutes an “involuntary termination” is expected to be released by the Internal Revenue Service in late March or ea
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