DOL Issues Model COBRA Subsidy Notices
The Department of Labor recently issued four model notices that can be used by employers and administrators in connection with the new COBRA subsidy. As detailed in the Compliance Alert dated February 18, 2009, the American Recovery and Reinvestment of Act of 2009 (ARRA) provides a 65% COBRA or NC State Continuation premium subsidy for “assistance eligible individuals” (AEIs) who are involuntarily terminated between September 1, 2008, and December 31, 2009, and their dependents. ARRA requires that plans notify certain current and former participants and beneficiaries about their rights under ARRA including the availability of the premium assistance, and the DOL has now provided model notices to help employers and administrators comply with these requirements.
Each model notice includes applicable disclosures, such as: (1) a summary of ARRA's premium reduction provisions; (2) a form to request the premium reduction (referred to as a "Request For Treatment As An Assistance Eligible Individual"); (3) a form for plans (or insurers) that permit qualified beneficiaries to switch coverage options to give notice of this option; (4) a form for an individual to use in satisfying ARRA's requirement to notify the plan (or insurer) that the individual is eligible for other group health plan coverage or Medicare; and (5) COBRA election forms and information.
Additionally, each model notice is designed for particular groups of qualified beneficiaries. The model notices discussed below can be located on the DOL website at http://www.dol.gov/ebsa/COBRAmodelnotice.html.
For Plans Subject to COBRA
General Notice – Abbreviated Version (does not include election notice)
Employers who are subject to COBRA should send this notice to ALL qualified beneficiaries who have elected and are still covered by COBRA after experiencing a qualifying event (regardless of the nature of the event) on or after September 1, 2008.
General Notice – Full Version (includes an election notice)
Employers who are subject to COBRA should send this notice to ALL qualified beneficiaries – not just covered employees – who experience a qualifying event (regardless of the nature of the event) from September 1, 2008, through December 31, 2009. This notice should be used to notify qualified beneficiaries who are not covered by COBRA. Going forward, employers who provide this notice to qualified beneficiaries experiencing a qualifying event will satisfy the existing requirements for COBRA election notices, as well as the ARRA requirements.
Extended Election Notice
Employers subject to COBRA should send this notice to any AEI (or any individual who would be an AEI if a COBRA continuation election were in effect) who: a) had a qualifying event from September 1, 2008, through February 16, 2009; AND b) either did not elect COBRA, or elected and subsequently dropped COBRA. This notice must be provided by April 18, 2009.
For Plans Subject to NC State Continuation
Alternative Notice
Insurance issuers that offer group health insurance coverage that is subject to NC State Continuation coverage requirements should send this notice to ALL qualified beneficiaries – not just covered employees – who have experience a qualifying event from September 1, 2008, through December 31, 2009, regardless of the nature of the qualifying event. This model notice should be modified to reflect the requirements of NC State Continuation law.
The DOL has also revised its website including a FAQ section for employers on the COBRA subsidy, as well as updated FAQs for employees.
For information on specific employer action items to consider, visit the Compliance Alert dated March 6, 2009. If you have any further questions, please contact our office at (919) 403-1986.
Important Notice: Hill, Chesson & Woody does not engage in the practice of law, accounting, or medicine. Therefore, the contents of this communication should not be regarded as a substitute for legal, tax, or medical advice.
March 23, 2009
Hill, Chesson & Woody Employee Benefit Services
194 Finley Golf Course Rd, Suite 200,
Chapel Hill, NC 27517
Phone: 919.403.1986
Fax: 919.869.2063
www.hcwbenefits.com