Government Issues Model Notices and Further Guidance on Extension of COBRA Subsidy
January 20, 2010
As we previously announced, on December 19, 2009, President Obama signed into law a 6-month extension of the COBRA premium subsidy that provides subsidy-eligible individuals with a 65% subsidy of their medical insurance premiums. The original premium subsidy law provided that individuals involuntarily terminated between September 1, 2008 and December 31, 2009 are entitled to a 65% subsidy of his or her COBRA premiums for 9 months following termination. The new law, effective upon signing did the following: (1) it extended the maximum number of months of subsidized continuation coverage from 9 months to 15 months; (2) it modified the subsidy eligibility period to make individuals eligible if they are involuntarily terminated from employment on or before February 28, 2010 (originally, the subsidy eligibility period ended on December 31, 2009); and (3) it required plan administrators to provide notice of the changes to individuals who may be affected.
On January 13, 2010, the Department of Labor (“DOL”) provided Model Notices to assist employers and plan administrators to comply with the new notice requirements. The model notices are located on the DOL’s website at http://www.dol.gov/ebsa/COBRAmodelnotice.html.
The DOL has also issued a Fact Sheet (available at http://www.dol.gov/ebsa/newsroom/fscobrapremiumreduction.html) and Frequently Asked Questions (available at http://www.dol.gov/ebsa/faqs/faq-cobra-premiumreductionEE.html). This interpretive guidance explains the provisions of the extended subsidy law.
The DOL issued three updated Model Notices:
· Updated General Notice
Plans subject to COBRA must provide the updated General Notice to all qualified beneficiaries who experienced a qualifying event at any time from September 1, 2008 through February 28, 2010 and who have not received a COBRA election notice. A qualified beneficiary must receive the updated General Notice regardless of the type of qualifying event. This updated General Notice includes updated information on the premium subsidy as well as information otherwise required in a COBRA election notice.
· Premium Assistance Extension Notice
Plans must provide a Premium Assistance Extension Notice to certain individuals who have already been provided a COBRA election notice that did not include information regarding the premium subsidy. Specifically, the following individuals must receive a Premium Assistance Extension Notice:
(1) Individuals who were “assistance eligible individuals” (“AEIs”) as of October 31, 2009 and individuals who experienced a termination of employment on or after October 31, 2009 and lost health coverage must be provided notice of the changes to the COBRA subsidy by February 17, 2010; and
(2) Individuals who are in a “transition period” must be provided a Premium Assistance Extension Notice within 60 days of the first day of the transition period. An individual's “transition period” is the period that begins immediately after the end of the maximum number of months (generally nine) of subsidized premiums available under the subsidy program prior to the December 9, 2009 amendment. Individuals are in a transition period only if the premium reduction provisions would continue to apply due to the extension from nine to 15 months and they are otherwise eligible for the premium reduction.
· Updated Alternative Notice
The DOL has issued a model updated Alternative Notice that insurance issuers who provide group health insurance coverage must send to individuals who became eligible for state-law continuation coverage. Continuation coverage requirements vary among states and issuers should modify the model Alternative Notice as necessary.
Obermayer attorneys are available to assist you with your questions on these new COBRA-related developments
