The Department of Labor has issued additional model notices to assist employers who self-administer COBRA in meeting the notification requirements of the most recent ARRA premium subsidy extension (discussed in the Compliance Alert dated March 8, 2010).  The new notices, which are provided online at the DOL’s EBSA website, may be utilized by COBRA third party administrators if they have not already developed their own.  The following is a detailed explanation of these notices:

Model Update General Notice
Plan sponsors subject to COBRA will use the Updated General Notice as their COBRA Election Notice on a go-forward basis.  In addition, plan sponsors must provide the Updated General Notice to the following individuals:

• Qualified beneficiaries who experienced a qualifying event at any time from September 1, 2008, through March 31, 2010, (regardless of the type of qualifying event) who have not yet been provided an election notice.
• Qualified beneficiaries who experienced a termination of employment on or after March 1, 2010, who did not receive a COBRA election notice containing information about the latest extension.  (These individuals should receive an additional 60 days to elect COBRA from the date the updated notice is provided.)

Model Notice of New Election Period
The most recent subsidy extension also created a new group of subsidy eligible individuals – those who experienced a reduction of hours followed by an involuntary termination of employment.  Eligible individuals will be entitled to subsidized coverage following their involuntary termination.  However, the 18-month maximum period of COBRA coverage for these individuals is measured from their reduction of hours.

Plan sponsors should send the Notice of New Election Period within 60 days of the date of termination of employment to individuals who:

• Experienced a qualifying event of reduction of hours causing a loss of coverage from September 1, 2008, through March 31, 2010;
• Subsequently experienced a termination of employment between March 2, 2010, and March 31, 2010; and
• Either did not elect COBRA coverage when first offered (following the reduction of hours) or who elected and subsequently dropped coverage.

Model Supplemental Information Notice
Plan sponsors should provide the Supplemental Information Notice to all individuals who elected and maintained COBRA coverage after a qualifying event in the following two scenarios:

• Termination of employment that occurred on or after March 1, 2010, in which the corresponding notice did not contain information about the extension of the subsidy.  (In this scenario, the notice must be provided before the end of the required time period for providing an election notice.)
• Reduction of hours occurring from September 1, 2008, through March 31, 2010, followed by a termination of employment occurring between March 2, 2010, and March 31, 2010.  (In this scenario, the notice must be provided within 60 days of the termination of employment.)

Model Notice of Extended Election Period
Plan sponsors should provide the Notice of Extended Election Period before the end of the required time period to provide an election notice to individuals who:

• Experienced a qualifying event of termination of employment on or after March 1, 2010;
• Were provided with a notice that did not contain information about the subsidy extension through March 31, 2010; and
• Either did not elect COBRA, or elected and subsequently dropped coverage.

Model Updated Alternative Notice
For plans subject to state continuation, the carrier must provide the Alternative Notice to all qualified beneficiaries who experience a qualifying event through March 31, 2010.

If you have any questions about the recent changes to the premium subsidy or the notice requirements, please visit the DOL’s EBSA website or contact our office at (919) 403-1986.