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March 26, 2010 | |
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DOL ISSUES UPDATED MODEL NOTICES FOR NEW COBRA SUBSIDY EXTENSION
Earlier this month we advised that President Obama signed a bill extending the COBRA premium subsidy through March 31, 2010 for covered individuals who experience an involuntary termination. March 4 CM. The new extension bill also expands the subsidy benefit to individuals whose COBRA qualifying event was a reduction in hours between September 1, 2008 through March 31 2010 that caused the loss of their health insurance, followed by termination on or after March 2, 2010 through March 31, 2010.
To reflect these recent changes, the Department of Labor ("DOL") issued five Model Notices for Group Health Plans to provide participants who experience a covered qualifying event. The Notices include updates to the existing Model Notices, as well as new Model Notices. As with prior DOL Model Notices, these are directed to specific groups of qualified COBRA beneficiaries and are part of a notice package intended to accommodate various types of health plans and individuals. Following is a brief summary of each, along with links to the Model Notices and their specific notice packages.
MODEL UPDATED GENERAL NOTICE:
Who must receive this Notice? All qualified beneficiaries who experienced a qualifying event between September 1, 2008 and March 31, 2010 and have not yet been provided an election notice must receive this Notice.
When must this Notice be provided? This Notice must be given before the end of the required time period for providing a COBRA election notice, i.e., the employer must notify the Plan of a qualifying event within 30 days of that event and the Plan must provide notice to the qualified beneficiaries within 14 days of receiving the employer's notice. Because individuals experiencing a qualifying event after March 1, 2010 may not have received proper notice, they must be provided 60 days from the date of the updated General Notice to make a COBRA election. Updated Model General Notice
MODEL NOTICE OF NEW ELECTION PERIOD:
Who must receive this Notice? If your group health plan is subject to continuation coverage provisions under Federal or State "mini-COBRA" laws such as Cal-COBRA, the Plan must provide this Notice to those individuals who:
(1) experienced a qualifying event that was a reduction in hours between September 1, 2008 and March 31, 2010;
(2) were thereafter terminated between March 2, 2010 and March 31, 2010; and
(3) did not elect continuation coverage when initially offered or elected it but later dropped the coverage.
When must this Notice be provided? The Plan Administrator must send a Notice of New Election Period within 60 days of the date of termination. Model Notice of Extended Election Period
MODEL SUPPLEMENTAL INFORMATION NOTICE:
Who must receive this Notice? If your group health plan is subject to continuation coverage provisions under Federal or State law, the Plan must provide this Notice to all individuals who elected and maintained continuation coverage because of the following qualifying events:
(1) the covered employee was terminated on or after March 1, 2010, but was not given notice of the availability of the COBRA premium subsidy; or
(2) the covered employee experienced a reduction in hours sometime between September 1, 2008 through March 31, 2010 and was then terminated on or after March 2, 2010 through March 31, 2010.
When must this Notice be provided? For individuals whose qualifying event occurred on or after March 1, 2010, but who were not notified of the COBRA premium subsidy, the Plan must provide this Notice within fourteen days of receiving the employer's notice of the qualifying event. If a covered employee is terminated after experiencing a reduction of hours, the Plan must notify all qualified beneficiaries within 60 days of the termination. Model Supplemental Information Notice
MODEL NOTICE OF EXTENDED ELECTION PERIOD:
Who must receive this Notice? If your Plan is subject to continuation coverage provisions under Federal or State law, the Plan must provide this Notice to individuals who:
(1) were terminated on or after March 1, 2010;
(2) were given a notice that failed to notify them of the COBRA premium subsidy; and
(3) either did not choose to elect COBRA or elected COBRA but subsequently terminated that health care coverage.
When must this Notice be provided? This notice must be provided before the end of the required time period for providing a COBRA election notice. Supplemental Information Notice
MODEL UPDATED ALTERNATIVE NOTICE:
Who must receive this Notice? If your Plan offers group health insurance coverage that is subject to a State "mini-COBRA" law, the insurer must provide this Alternative Notice to all qualified beneficiaries who have experienced a qualifying event through March 31, 2010. Because continuation coverage requirements may vary among States, this Notice may need to be modified to conform to the applicable State law.
When must this Notice be provided? Assuming your state has implemented this recent subsidy extension, insurers must distribute this Notice within the time required by the applicable state law. Model Updated Alternative Notice
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 five updated Model Notices and ensure that these individuals and their qualified beneficiaries are sent the appropriate notice. Remember, this most recent extension law has expanded eligibility for the subsidy to a new group - individuals (and their family members) who experienced a qualifying event of a reduction in hours between September 1, 2008 and March 31, 2010 that resulted in a loss of group health insurance and were subsequently terminated between March 2 and March 31, 2010.
· 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 on or after March 1, 2010. States may need to amend their existing mini-COBRA laws to implement this 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 premium subsidy extension law, including preparing 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.
FURTHER COBRA SUBSIDY EXTENSION UNDER CONSIDERATION
Congress is currently considering the American Workers, State and Business Relief Act of 2010, a bill which extends the COBRA subsidy provision through December 31, 2010. We will update you on any new developments that occur with this legislation.
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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