LABOR DEPARTMENT ISSUES MODEL COBRA SUBSIDY EXTENSION NOTICES
As part of the 2010 Department of Defense appropriations bill, Congress did two things relating to COBRA. First, it extended the initial eligibility period for subsidized federal COBRA benefits to terminations and layoffs through February 28th (the original deadline was December 31st). Second, it extended the subsidy period from 9 months to 15 months.
CM 12/12/09
These changes require employers and their COBRA administrators to revise the current COBRA notices. To assist employers with that effort, the Department of Labor just issued three new Model Notices to advise employees and their dependents of these new rights.
To start with, each Model Notice is designed for a specific group of qualified COBRA beneficiaries and is part of a notice package tailored to accommodate different types of health plans and individuals. The notice packages not only include the updated notices of COBRA election, but also some or all of the following required documents:
(i) a summary of the new premium subsidy / reduction provisions;
(ii) questions and answers describing important information about COBRA continuation coverage rights; and
(iii) informational and administrative forms to use in requesting the premium reduction and electing COBRA coverage.
Updated General Notice: This notice contains updated information about the premium reduction, as well as mandatory information for the COBRA election notice. Group health plans subject to COBRA must send this notice to the following individuals:
· All COBRA-qualified individuals who experienced a qualifying event between September 1, 2008 and February 28, 2010 who have not yet been provided a COBRA election notice.
· Individuals terminated in December 2009 who were not COBRA-eligible until January 2010 and thus did not receive proper notice in light of the new extension period. (These individuals should receive an Updated General Notice and be provided the full 60 days from the date of the updated notice to make a COBRA election).
Under basic COBRA rules (which have not changed) this notice must provided to employees and their qualified dependents upon the occurrence of a COBRA qualifying event. The employer must notify the Plan Administrator within 30 days of the qualifying event. The Plan has 14 days thereafter to provide notice to the employee and the employee's qualified beneficiaries. Link to Updated General Notice
Premium Assistance Extension Notice: Plan administrators must provide this notice to individuals who have already been given a COBRA election notice which did not include the updated COBRA extension information. The model Premium Assistance Extension Notice contains information about changes to the subsidy (aka premium reduction) provisions. Individuals entitled to receive this notice include:
· Individuals who are: (i) COBRA eligible as of October 31, 2009; (ii) are receiving COBRA premium assistance as of that date or have received their nine-month subsidy; and (iii) who either dropped COBRA or paid the full premiums when the subsidy expired.
· Individuals who are terminated from employment on or after October 31, 2009 and lost health coverage (unless they were already provided a timely, updated General Notice).
These individuals must be provided notice of the recent changes to the COBRA premium reduction provisions by February 17, 2010. If, however, an individual is in a "transition period," notice must be provided within 60 days of the first day of the transition period. The DOL defines a "transition period" as the period that begins immediately after the end of an individual's maximum number of months (generally nine) of premium reduction available prior to the recent ARRA amendment. An individual is in a transition period only if the premium reduction provisions continue to apply because of the extension from 9 to 15 months and he/she otherwise remains eligible for the premium reduction.
The DOL recognizes there is some overlap among the groups entitled to the Premium Assistance Extension Notice, thus creating a situation where an individual may be entitled to multiple notices. Where such overlap exists, notice requirement(s) will be satisfied by providing notice by the earliest date required. Link to Premium Assistance Extension Notice
Updated Alternative Notice: This notice is intended for insurance issuers that provide group health insurance coverage to individuals who become eligible for continuation coverage under a State "mini-COBRA" law. California's "mini-COBRA" law, Cal-COBRA, applies to those who work for companies with fewer than 20 employees. Since continuation coverage requirements may vary among States, insurance issuers may need to modify the model notice to conform to applicable State law.
Employer's COBRA To-Do List
· If you have not already done so, prepare a list of all employees whose termination dates and circumstances entitle them to receive one of the three updated Model Notices and ensure that these individuals and their qualified beneficiaries are sent the appropriate notice.
· Review the Model Notices and decide whether to utilize these notices with modifications for your group health plan or to revise existing COBRA notices by incorporating the new provisions and forms from the Model Notice packages. If you are working with a third party administrator, check with the company to be sure they are able to timely complete all of the required communications.
· If you have fewer than 20 employees and are covered by Cal-COBRA (or some other state's mini-COBRA law), check with your insurance carrier and the responsible state agency to determine whether the notice responsibilities have changed for employees who experience a COBRA qualifying event after December 31, 2009. States may need to amend their existing mini-COBRA laws to implement the new COBRA extension.
· If you use a third party administrator for your COBRA notice, confirm that they are updating their COBRA notices consistent with the new Model Notices and meeting the new notice deadlines.
· If you do not use a third party administrator, confer with your insurer or broker to determine whether they will prepare and/or distribute any required notices.
Your contact at the Firm is ready to assist you if you have any questions about this topic or wish to arrange for a review of your updated COBRA election notices.
For more information, call us today at (818) 508-3700,
or visit us on the web, at www.brgslaw.com.
Sincerely,
Richard S. Rosenberg
Partner
BRG&S, LLP
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