On Jan. 14, 2010, the Department of Labor's Employee Benefits Security Administration (EBSA) added to its COBRA web site updated model notices for the extension provisions of the federal COBRA subsidy.
Eligible individuals pay only 35 percent of their COBRA premiums under the subsidy program, with the remaining 65 percent reimbursed to the coverage provider (generally the former employer) through a tax credit. To qualify, individuals must experience a COBRA qualifying event such as the involuntary termination of a covered employee's employment.
On Dec. 19, 2009, President Barack Obama signed into law an extension of the original COBRA subsidy enacted in February 2009. Under the extension, individuals are eligible for the subsidy if the involuntary termination occurred during the period that began Sept. 1, 2008 and ends on Feb. 28, 2010 (the loss of coverage does not have to occur by that date). Also, the length of the premium assistance period that began on or after Feb. 17, 2009, was extended from nine months to 15 months.
To reflect these changes, EBSA updated its model notices to help plans and individuals comply with these requirements. Each model notice is designed for a particular group of qualified beneficiaries and contains information to help satisfy the notice provisions, including those added by the COBRA subsidy extension. These include an:
• Updated General Notice. Plans subject to the federal COBRA provisions must provide the updated General Notice to all qualified beneficiaries (not just covered employees) who experienced a qualifying event at any time from Sept 1, 2008 through Feb. 28, 2010, regardless of the type of qualifying event, and who have not yet been provided an election notice. This model notice includes updated information on the premium reduction as well as information required in a COBRA election notice.
Individuals who terminated employment in December 2009 but who were not eligible for COBRA coverage until January 2010 were likely not provided proper notice. These individuals should get the updated General Notice and a full 60 days from the date the updated notice is provided to make a COBRA election.
• Premium Assistance Extension Notice. Plan administrators must provide notice to certain individuals who have already been provided a COBRA election notice that did not include information regarding the extension period for the subsidy. This model Premium Assistance Extension Notice includes information about the changes made to the premium reduction provisions. Below are the affected individuals and the associated timing requirements:
• Individuals who were "assistance eligible individuals" as of Oct. 31, 2009 (unless they are in a transition period), and individuals who experienced a termination of employment on or after Oct. 31, 2009 and lost health coverage (unless they were already provided a timely, updated General Notice) must be provided notice of the changes made to the premium reduction provisions.
• Individuals who are in a "transition period" must be provided this notice within 60 days of the first day of the transition period. An individual's "transition period" begins immediately after the end of the maximum number of months (generally nine) of premium reduction available under the subsidy prior to its extension. An individual is in a transition period only if the premium reduction provisions would continue to apply because of the extension from nine to 15 months and they otherwise remain eligible for the premium reduction.
According to the EBSA web site, to some extent the groups listed above overlap—creating a situation where an individual may be entitled to multiple notices. Providing the Premium Assistance Extension Notice by the earliest date required will satisfy the notice requirements.
• Updated Alternative Notice. Insurance issuers that provide group health insurance coverage must send the updated 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 Premium Assistance Extension Notice or the updated model General Notice appropriate for use in certain situations.
Stephen Miller is an online editor/manager for SHRM.
Related Article:
Fast Turnaround Needed on COBRA Subsidy Extension Notices, SHRM Online Legal Issues, January 2010
Quick Link:
SHRM Online Benefits Discipline