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Not returning from FMLA due to health --ARRA & Involuntary Termination? Texas

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  • Not returning from FMLA due to health --ARRA & Involuntary Termination? Texas

    I have been off work for several months due to sickness. I notified my workplace that I would be unable to return from leave (FMLA) because my health had not improved, as policy and the law seem to require. There's no question that I'm sick...both the short-term and long-term disability insurance policies (through the employer) are paying without question.

    When I applied for COBRA coverage, I was told that I am not eligible for the ARRA premium reduction since my notice that I was unable to return from leave constituted "voluntary separation." That seems to directly contradict IRS Notice 2009-27. It states, in a way that seems to be clear to me, that separation because of inability to work due to health (after FMLA protections expire) is "Involuntary Termination."

    The employer said, "If the employee initiates the termination of employment by indicating they are not returning or failing to contact the worksite employer, however, the employee would be considered to have voluntarily terminated their employment and they would not be eligible for the COBRA subsidy." That seems to be a Catch-22...notification means voluntary, but no notification ALSO means voluntary?

    I have complete the DOL expedited review of denial online. Should I do anything else? Am I mistaken in my understanding of the IRS rules for termination and the ARRA?


  • #2
    IRS guidance clarifies that involuntary terminations for purposes of the COBRA subsidy include- An employer's action to terminate an employee who is absent from work because of illness or disability.

    The guidance also clarifies that the following are not considered to be involuntary terminations for purposes of the COBRA subsidy - Absence from work because of illness or disability *(unless the employer takes action to terminate the employee)*

    (IRS recently released Notice 2009-27 which *clarified* that while an employee’s absence due to illness or disability will not constitute an involuntary termination, an employer’s action to terminate the employee while he or she is absent due to illness or injury will be deemed an involuntary termination.)

    It would only be an involuntary termination if your employer takes action to terminate you while absent due to an illness or injury. In your case, you initiated the termination. That would be voluntary. If your employer had terminated you after FMLA expired, that would have been involuntary. The employer has to initiate the separation.

    Since you have completed the review of denial online, hold for a reply & see what they say. Sometimes a "resignation" (employee initiated separation) which would be voluntary will be considered involuntary if the employer would have terminated the employee had they not "resigned." However, the employee had to know that they would have been terminated if they didn't resign.
    Last edited by Betty3; 07-23-2009, 10:21 PM. Reason: add info
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    • #3
      I am confused Betty - The OP could not return from FMLA due to illness, not because the OP choose to not keep the job, so in essence the employer terminated the OP so wouldn't it be involuntary ?


      • #4
        Involuntary Term for health

        I received my DOL appeal and they approved the review, stating that my termination was involuntary and that the ARRA does cover someone that stops working due to health. The text from the IRS bulletin covers my circumstance exactly.


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