The American Recovery and Reinvestment Act of 2009 (ARRA) enacted a new 65 percent subsidy for COBRA premiums paid by qualified beneficiaries who lose coverage because of a covered employee’s involuntary termination from employment at any time from September 1, 2008, through December 31, 2009. Those who are eligible for the subsidy are called assistance-eligible individuals (AEIs).
A key aspect of enforcing these provisions, as is true of all COBRA provisions, is a notice mechanism—qualified beneficiaries and potential AEIs must be notified of their rights, and, in turn, qualified beneficiaries must notify the plan administrator of any facts that cause them to lose their entitlement to the credit. ARRA required the U.S. Department of Labor (DOL) to issue new notices that could be used for purposes of communicating the new COBRA premium assistance rules to qualified beneficiaries. On March 19, 2009, the DOL issued those notices.
Employers and plan administrators must review these notices as soon as possible. As explained below, one of these notices must be sent out by April 18, 2009.
The DOL created four model notices to help plans and individuals comply with the ARRA requirements. Each model notice is designed for a particular group of qualified beneficiaries and contains information to help satisfy ARRA’s notice provisions. In addition, the DOL issued a formal announcement in the March 20, 2009, Federal Register explaining these notices. Click here for a copy of that official notice.
Notice in Connection with Extended Election Periods
Plans subject to the federal COBRA provisions must send the Notice in Connection with Extended Election Periods to any AEI (or any individual who would be an AEI if a COBRA continuation election were in effect) who had a qualifying event at any time from September 1, 2008, through February 16, 2009, and either did not elect COBRA continuation coverage, or elected it but subsequently discontinued COBRA.
This notice includes information on ARRA’s additional election opportunity, as well as premium reduction information. This notice must be provided by April 18, 2009. Click here for a copy of this notice.
General Notice (Full version)
Plans subject to the Federal COBRA provisions must send the General Notice to all qualified beneficiaries, not just covered employees, who experienced a qualifying event at any time from September 1, 2008, through December 31, 2009, regardless of the type of qualifying event. This full version includes information on the premium reduction as well as information required in a COBRA election notice. Click here for a copy of this notice.
General Notice (Abbreviated version)
The abbreviated version of the General Notice includes the same information as the full version regarding the availability of the premium reduction and other rights under ARRA, but does not include the COBRA coverage election information. It may be sent in lieu of the full version to individuals who experienced a qualifying event during on or after September 1, 2008, have already elected COBRA coverage, and still have it. Click here for a copy of this notice.
Insurance issuers that provide group health insurance coverage must send the Alternative Notice to persons who became eligible for continuation coverage under a state law. Continuation coverage requirements vary among states, and issuers should modify this model notice as necessary to conform it to the applicable state law. Issuers may also find the model Alternative Notice or the abbreviated model General Notice appropriate for use in certain situations. Click here for a copy of this notice.