The Department of Labor has released three model notices that may be used to meet the notification requirements relating to the ARRA premium subsidy extension, as detailed in the Compliance Alert dated December 12, 2009. These notices, which are provided online at the DOL’s EBSA website, include an Updated General Notice and a Premium Assistance Extension Notice for plans subject to COBRA, as well as an updated alternative notice for plans subject to NC State Continuation coverage. The following is a detailed explanation of these notices:

Model COBRA Notices
The Updated General Notice and Premium Assistance Extension Notice may be used by plans subject to COBRA (those with 20 or more employees during the prior year) to meet the subsidy extension notification requirements. Action items for each of these notices are listed below for employers who self-administer COBRA. For those employers utilizing a third-party administrator (TPA), the TPA will provide the required notices. 

Updated General Notice
Employers who self-administer COBRA should provide this notice to individuals who:

• Experienced a termination of employment in December 2009 and did not become eligible for COBRA until January 2010; and
• Were provided a COBRA election notice that did contain information about the COBRA subsidy extension and therefore did not meet the subsidy extension requirements.

In addition to the individuals listed above, self-administering employers must provide the Updated General Notice by February 17, 2010 to:

• All individuals terminated from employment on or after October 31, 2009, who have not yet been provided a COBRA election notice
• All Assistance Eligible Individuals (AEIs) who have not yet been provided a COBRA election notice
• All qualified beneficiaries who experience a qualifying event at any time from September 1, 2008, through February 28, 2010, regardless of the nature of the qualifying event, who have not yet been provided with an election notice

All of the recipients listed above should be given the full 60 days to elect COBRA from the date the notice is provided.

Also, for those self-administering COBRA, the Updated General Notice should be used as your COBRA election notice on a go-forward basis for all qualifying events.  This notice should be provided to all qualified beneficiaries experiencing any type of qualifying event after December 19, 2009, within the normal timeframes for providing COBRA election notices.
 
Premium Assistance Extension Notice
This notice applies to certain individuals who have already received a COBRA election notice and must now receive information on the COBRA subsidy extension.

Employers who self-administer COBRA must provide this notice to AEIs in a transition period within 60 days of the start of the individual’s transition period.  An AEI is in a transition period if (1) the original 9-month subsidy period was exhausted on or before December 19, 2009 (the date the extension became effective); (2) the subsidy still applies due to the extension; and (3) the individual is still eligible for the subsidy.

If the AEI pays 35% of the COBRA premium by the later of February 17, 2010, or 30 days after the notice is provided, the employer must retroactively reinstate the COBRA coverage.  For plans whose coverage runs through the end of the month following termination, individuals whose subsidy ended on November 30, 2009, must be provided the Premium Assistance Extension Notice by January 29, 2010.

Employers who self-administer COBRA must also provide this notice to the following individuals by February 17, 2010:

1. All qualified beneficiaries who experienced a termination of employment on or after October 31, 2009, and received an election notice that did not contain information on the COBRA subsidy extension.
2. All individuals who were Assistance Eligible Individuals on or after October 31, 2009, and received an election notice that did not contain information on the COBRA subsidy extension. If the AEI is in a transition period, the notification is sent pursuant to the requirements discussed above.

Model State Continuation Notice
As the subsidy extension also applies to NC State Continuation coverage, the DOL has released an Updated Alternative Notice that can be used by insurance carriers to send to those individuals who became eligible for NC State Continuation coverage.  As a reminder for groups subject to NC State Continuation laws (those with less than 20 employees for the prior year), the insurance carrier is responsible for providing notification to affected qualified beneficiaries, paying the 65% of the premium, and collecting the payroll tax credit.

Other Helpful Materials
The DOL has also published additional materials on its website that employers may find helpful including:

• An updated COBRA subsidy Fact Sheet and
• An updated FAQs on the COBRA subsidy

If you have any questions about the premium subsidy extension and the notification requirements, please contact our office at (919) 403-1986.