As reported in our Management Alert entitled “COBRA Subsidy Extension and New Notice Requirements,” the Department of Defense Appropriations Act (Defense Act) extended the length of the COBRA subsidy period to 15 months and the period of eligibility to February 28, 2010. The Defense Act also included additional COBRA notice requirements. To help employers comply with these new notice requirements, the Department of Labor (DOL) has updated the model notices they originally released after the passage of the American Recovery and Reinvestment Act of 2009 (ARRA). The information on the DOL’s COBRA website has also been updated to include a Fact Sheet explaining when the notices must be provided.
ARRA, as amended by the Defense Act, requires plans to notify certain participants and beneficiaries about the availability of the extended COBRA subsidy. The DOL has issued three separate updated DOL model notices covering different situations.
- General Notice. The General Notice (the “full version”) must be sent to all qualified beneficiaries (not just covered employees) who have not been provided a COBRA election notice, and who have a qualifying event at any time from September 1, 2008 through February 28, 2010 (regardless of the type of qualifying event). The updated General Notice is very similar to the general notice that was released by the DOL after ARRA’s enactment, and has only been slightly modified to include the new subsidy provisions of ARRA made by the Defense Act.
Individuals who experience a qualifying event after December 19, 2009 must get the updated General Notice within the normal timeframes for providing a COBRA election notice.
- Extension Notice. The “Premium Assistance Extension Notice” should be provided to individuals who:
- As of October 31, 2009, were receiving premium assistance;
- As of October 31, 2009, had received the full nine months of premium assistance required under ARRA and either did not make a payment for subsequent periods of coverage, made payment of less than the full COBRA premium, or made payment of the full premium; or
- Experienced a qualifying event that was the termination of a covered employee’s employment on or after October 31, 2009, and did not received a notice that explained the premium subsidy as extended.
This version of the notice includes information regarding the changes made to the subsidy provisions of ARRA by the Defense Act. The timing of this notice differs depends on what circumstances entitle the individual to the Extension Notice.
- Alternative Notice. This version is to be sent by insurance issuers that provide group health insurance coverage to persons who became eligible for continuation coverage under State law. Since these coverage requirements vary among states, issuers should modify this model notice as necessary to conform to applicable State law. The updated Alternative Notice is very similar to the alternative notice that was released by the DOL after ARRA’s enactment, and has only been slightly modified to include the new subsidy provisions of ARRA made by the Defense Act.
According to the DOL’s Fact Sheet, the Premium Assistance Extension Notice must be provided within the following timeframes:
- Individuals who are in a “transition period” must be provided notice of the changes made to the premium reduction provisions of ARRA within 60 days of the first day of the transition period. (The transition period begins immediately after the end of the nine month premium reduction in effect under ARRA, if the premium reduction provisions of the Defense Act would apply due to the extension from nine to 15 months.)
- Other individuals who were “assistance eligible individuals” as of October 31, 2009 and individuals who experienced a termination of employment on or after October 31, 2009 and lost health coverage (unless they were already provided a timely, updated General Notice) must be provided notice of the changes made by the Defense Act by February 17, 2010.
Although the groups listed above may overlap in some instances (making some individuals entitled to multiple notices), providing a single notice that includes all of the required information is sufficient as long as the notice is provided by the earliest date required.
Employers should update their notices as soon as possible to reflect the new subsidy extension.