Department of Labor Issues COBRA Subsidy Model Notices
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DOL Issues COBRA Subsidy Model Notices
By Stephen Miller
(You can view the entire article here)
The American Recovery and Reinvestment Act (ARRA), signed into law in February 2009, mandates that plans notify certain current and former participants and beneficiaries about the COBRA premium reduction subsidy (see “COBRA Coverage Expansion: HR Action Steps to Take Now”).
The U.S. Department of Labor (DOL) has created model notices to help plans and individuals comply with these requirements. Each model notice is designed for a particular group of qualified beneficiaries and contains information to help satisfy ARRA’s notice provisions.
“The model notices we are releasing enable employers to quickly spell out for former employees and their families how to take advantage of COBRA coverage and the subsidy,” said Secretary of Labor Hilda L. Solis in a statement. “The ARRA provides a 65 percent tax subsidy for the cost of health benefits, making them more affordable for the unemployed and their families. Millions of individuals, including those who previously declined employer-provided coverage under COBRA, will be eligible to receive a subsidy on their premiums for up to nine months.”
General Notice (Full version). Plans subject to the federal COBRA provisions must send the General Notice to all qualified beneficiaries, not just covered employees, who experienced a qualifying event at any time from Sept. 1, 2008 through Dec. 31, 2009, regardless of the type of qualifying event. This full version includes information on the premium reduction as well as information required in a COBRA election notice.
General Notice (Abbreviated version). The abbreviated version of the General Notice includes the same information as the full version regarding the availability of the premium reduction and other rights under ARRA but does not include the COBRA coverage election information. It may be sent in lieu of the full version to individuals who experienced a qualifying event on or after Sept. 1, 2008; have already elected COBRA coverage; and still have it.
Alternative Notice. Insurance issuers that provide group health insurance coverage must send the Alternative Notice to persons who became eligible for continuation coverage under a state law. Continuation coverage requirements vary among states, and issuers should modify this model notice as necessary to conform it to the applicable state law. Issuers may also find the model Alternative Notice or the abbreviated model General Notice appropriate for use in certain situations.
Notice in Connection with Extended Election Periods. Plans subject to the federal COBRA provisions must send the Notice in Connection with Extended Election Periods to any assistance eligible individual (or any individual who would be an assistance eligible individual if a COBRA continuation election were in effect) who:
Had a qualifying event at any time from Sept. 1, 2008 through Feb. 16, 2009, and;
Did not elect COBRA continuation coverage, or elected it but subsequently discontinued COBRA.
This notice includes information on ARRA’s additional election opportunity as well as premium reduction information. This notice must be provided by April 18, 2009.
As you can see, the Department of Labor has issued model notices that relate to the 65% COBRA Subsidy provided to eligible employees as part of the federal stimulus package. These notices can be used by employers/plan administrators when communicating with eligible employees about their COBRA options.
Dirk A. Beamer