Government Subsidy for COBRA Premiums – Part V: DOL Issues Updated Model Notices
This is the fifth in a series of Advisories we have issued on the government’s temporary COBRA subsidy for qualified beneficiaries who lose or lost coverage due to an involuntary termination of employment. See our prior Advisories of February 20, March 3, March 20, 2009 and December 22, 2009 for details.
On December 21, 2009, President Obama signed into law an extension and expansion of the COBRA premium subsidy law as part of the Department of Defense Appropriations Act for Fiscal Year 2010 (the “Act”). Under the premium assistance program, the federal government temporarily subsidizes 65% of the COBRA premiums of “assistance eligible individuals” (“AEIs”). AEIs now include employees and their eligible dependents who (1) lose their employer provided health coverage due to the employee’s involuntary termination from employment (other than for gross misconduct) during the period September 1, 2008 to February 28, 2010 and (2) elect COBRA continuation coverage. The premium subsidy extension applies to state mini-COBRA statutes as well.
As required under the Act, the Department of Labor (the “DOL”) recently issued a model General Notice, a Premium Assistance Extension Notice, and an Updated Alternative Notice which are briefly described below. The model notices now are available at http://www.dol.gov/ebsa/COBRAmodelnotice.html.
Updated General Notice. Plan administrators must provide the Updated General Notice, which includes information about the premium subsidy, to all qualified beneficiaries (not just covered employees) who (a) experience a qualifying event at any time from September 1, 2008 through February 28, 2010 regardless of the type of qualifying event, and (b) have not yet been provided a COBRA election notice.
The DOL notes that plan administrators should provide the Updated General Notice to individuals who experienced a qualifying event that was a termination of employment in December 2009 but who were not provided with a notice that included information about the premium subsidy (which originally was due to expire on December 31, 2009). These individuals should receive the full 60 days from the date the Updated General Notice is provided to make a COBRA election.
The Updated General Notice includes both updated information on the premium subsidy and information required in a COBRA election notice. Accordingly, plan administrators may provide this Updated General Notice as part of the COBRA election notice materials.
Premium Assistance Extension Notice. The Premium Assistance Extension Notice includes information about the changes made by the Act. Plan administrators must provide certain individuals who have already been provided a COBRA election notice package with a Premium Assistance Extension Notice. Listed below are the affected individuals who must receive this new notice and the associated timing requirements.
- Individuals who were AEIs as of October 31, 2009 (unless they are in a “transition period” - as described below) and individuals who terminated employment on or after October 31, 2009 and up to February 28, 2010 and lost employer provided health coverage (unless they were already provided a timely, updated General Notice) must be provided the Premium Assistance Extension Notice by February 17, 2010.
- An individual who is in a “transition period” must be provided the Premium Assistance Extension Notice within 60 days after the first day of the transition period. This transition period begins immediately after the end of the maximum number of months (generally nine) of the premium subsidy originally in effect before the extension. An individual is in a transition period only if the premium subsidy provisions would continue to apply to this individual due to the extension from 9 to 15 months and if he or she otherwise remains eligible for the premium subsidy.
The DOL notes that some individuals may be entitled to multiple notices. To satisfy the notice requirements, plan administrators may provide these individuals with a single notice that includes all of the required information so long as the notice is provided by the earliest date required.
Updated Alternative Notice. Insurance issuers that provide group health insurance coverage must send the Updated Alternative Notice to individuals who became eligible for continuation coverage under a state law. This notice must be modified to conform to a state’s particular requirements. The DOL notes that the two notices discussed above may be appropriate for use in certain situations.
We will continue to provide updates on future developments.