DOL ISSUES MODEL NOTICES FOR AMERICAN RECOVERY AND REINVESTMENT ACT
COBRA Premium Subsidy and Extended Election Period
On March 19th, the DOL issued model notices that will comply with the American Recovery and Reinvestment Act of 2009 (ARRA) requirement that group health plan administrator’s notify COBRA qualified beneficiaries of the 65% premium subsidy and of the extended COBRA election period for employees involuntarily terminated between September 1, 2008 and February 16, 2009. The notices are available on the DOL website. The following notices are provided:
- General Notice. General Notice to all qualified beneficiaries, not just covered employees, who experienced a qualifying event at any time from September 1, 2008 through December 31, 2009, regardless of the type of qualifying event, and have not yet been provided a COBRA election notice or who were provided a COBRA election notice after February 16, 2009 that did not include the ARRA required information about the COBRA premium subsidy.
- Abbreviated General Notice. The Abbreviated General Notice may be sent in lieu of the General Notice to individuals who experienced a qualifying event on or after September 1, 2008, have already elected COBRA coverage, and still have it.
- Extended Election Period Notice. The Extended Election Period Notice must be sent to any individual whose qualifying event was involuntary termination of employment between September 1, 2008 and February 16, 2009; and who either did not initially elect COBRA continuation coverage or discontinued COBRA before February 17.
- Alternative Notice. The Alternative Notice must be sent by insurance companies to individuals who are not eligible for COBRA but become eligible for continuation coverage under a state insurance law between September 1, 2008 and December 31, 2009.
The Following Items are of Particular Importance for Employers
- Every individual who is provided a COBRA election notice after February 16, 2009 for a qualifying event that occurs after August 31, 2008 and before January 1, 2010 must be given notice of the premium subsidy, even if he or she is not eligible for it. For example, an employee’s child who lost coverage because she passed the plan’s limiting age must be given the notice. If a COBRA election notice was provided to a qualified beneficiary before February 17, 2009, no additional notice is required by the act unless the qualifying event was involuntary termination of employment.
- Every individual who lost coverage due to an involuntary termination of employment between September 1, 2008 and February 16, 2009 and either did not elect COBRA continuation or discontinued it, must receive notice of the extended COBRA election period and the premium subsidy. Cautious employers will send the notice to all individuals whose qualifying event was termination of employment during that period to avoid potential liability to any who dispute that their terminations were voluntary. The DOL has indicated informally that the notices should be given to all qualified beneficiaries whose qualifying even was termination of employment between September 1, 2008 and February 16, 2009, inclusive.
- Employers must decide whether to (a) automatically give the premium subsidy to individuals eligible due to involuntary termination of employment subject to the individual’s waiver or notice of ineligibility or (b) require them to apply for the subsidy.
Employers who use the services of third party COBRA administrators should confer with them to ensure that the required notices are sent.
Employers who have a minimal number of COBRA qualified beneficiaries may choose to use the DOL model notices, perhaps with a few modifications.
Employers who administer their own COBRA programs and who have substantial numbers of eligible individuals should consider tailoring the DOL notices so that they can simply be added to the employers’ current COBRA notices.
The Employee Benefits Group at Oppenheimer Wolff & Donnelly LLP will be pleased to assist you in complying with the new obligations under ARRA. Contact any of the members of the group if you have questions or would like assistance.
This alert is a copyrighted publication produced by Oppenheimer Wolff & Donnelly LLP. The information contained in this alert is of a general nature and is subject to change. Readers should not act without further inquiry and/or consultation with legal counsel.