The United States Department of Labor (DOL) has released revised model notices and forms that plan administrators may use to alert COBRA qualified beneficiaries (and those entitled to state continuation coverage) to changes made last month to the COBRA premium subsidy that was enacted in February 2009. In general, the COBRA premium subsidy eligibility period was extended by two months (from December 31, 2009, to February 28, 2010), and the maximum subsidy period was increased by an additional six months (from nine months to 15 months). Please see our December 2009 alert, “COBRA Subsidy Extended” for more details about the changes in the COBRA subsidy provisions. Click here to view the alert.
The revised model notices are described in detail below:
Updated General Notice. Plan administrators of plans subject to federal COBRA must provide the updated General Notice to all qualified beneficiaries who experience a qualifying event at any time before March 1, 2010, and who have not yet received an election notice, regardless of the type of qualifying event (i.e., any qualifying event, not limited to involuntary terminations). For qualifying events occurring after December 19, 2009, this notice must be provided within the normal timeframe for providing a COBRA election notice. Notably, the DOL has stated that for individuals who experienced a termination of employment at any time in December 2009 but were not eligible for COBRA coverage until January 2010, the 60-day COBRA election period will not start until an updated election notice has been provided (i.e., any earlier notice that was not updated for the extension will not start the 60-day election period).
Updated Alternative Notice. The “Alternative Notice” has been revised to reflect the COBRA premium subsidy changes for individuals who become eligible for continuation coverage under state law. Similar to the General Notice, the Alternative Notice must be provided to all qualified beneficiaries, not just covered employees, who experience a qualifying event through February 28, 2010, and who have not yet received an election notice. Insurers should modify the model according to the applicable state continuation coverage requirements.
Premium Assistance Extension Notice. Plan administrators also must provide notice of the COBRA subsidy changes to certain individuals who have already received a COBRA or state continuation coverage election notice that did not include information about the subsidy changes made last month.
The Premium Assistance Extension Notice must be provided to the following by February 17, 2010:
- individuals who were “AEIs” as of October 31, 2009, unless they are in a “transition period” as discussed below (an AEI is a COBRA-qualified beneficiary – a covered employee, his or her covered spouse or dependent child – whose applicable qualifying event is the employee’s involuntary termination during the period beginning September 1, 2008, and ending February 28, 2010, and who timely elected COBRA), and
- individuals who experienced a termination of employment on or after October 31, 2009, and lost health coverage (unless they were provided a timely, updated General Notice).
For AEIs in a “transition period,” the Premium Assistance Extension Notice must be provided within 60 days of the first day of the transition period. The “transition period” is the period beginning immediately after the end of the maximum number of months of COBRA subsidy available under the old subsidy rules (generally nine months). An individual is in a transition period only if the premium reduction provisions would continue to apply due to the extension from nine to 15 months and the individual otherwise remains eligible for the premium reduction. This applies to individuals who received the full, initial nine months of subsidized COBRA, and thereafter in November and/or December 2009 paid the full rate to maintain COBRA coverage absent the subsidy. It also applies to individuals who received the full, initial nine months of subsidized COBRA but who did not pay the COBRA premium for a month or months during the “transition period” and who may retroactively pay the premium at the subsidized rate and reinstate COBRA coverage. Such an individual will have to pay the retroactive premium due by the later of February 17, 2010, or 30 days after the plan administrator provides notice of the extension.
In the event that the groups described with respect to the General Notice and the Premium Assistance Extension Notice overlap and a qualified beneficiary is entitled to more than one notice, the DOL has indicated that providing the Premium Assistance Extension Notice by the earliest date required will satisfy the notice requirement. All of these notices are available at the Department of Labor’s COBRA website: http://www.dol.gov/ebsa/COBRAmodelnotice.html.