Department of Labor Issues New COBRA Subsidy Extension Information

The Department of Labor has updated its COBRA web site (www.dol.gov/COBRA) to include information on the extension of the COBRA subsidy, including new model notices.

There are three model notices. A definition of each notice and a link is provided below:

Model COBRA Continuation Coverage Election Notice

This notice must be sent to all qualified employees, not just covered employees, who experienced a qualifying event at any time from September 1, 2008 through February 28, 2010, regardless of the type of qualifying event, and who have not yet been provided an election notice.

Participants who experienced any qualifying event after December 19, 2009 must get the updated General Notice within the normal timeframes for providing a COBRA election notice. The updated model General Notice includes information on the premium reduction as well as information required in a COBRA election notice.

Model Premium Assistance Extension Notice

This notice must be sent to individuals who already received a COBRA election notice that did not include information about the COBRA subsidy extension. Participants who must receive this notice include:

• Individuals who were “assistance eligible individuals” as of October 31, 2009 (unless they are in a transition period - see below) 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 to the premium reduction provisions of ARRA by the 2010 DOD Act by February 17, 2010;
• Individuals who are in a “transition period” must be provided notice of the changes made to the premium reduction provisions of ARRA by the 2010 DOD Act within 60 days of the first day of the transition period. (The transition period begins immediately after the end of the nine months of premium reduction in effect under ARRA before the amendments made by the 2010 DOD Act, as long as the premium reduction provisions of the 2010 DOD Act would apply due to the extension from nine to 15 months).

This notice is for use where coverage is subject to State continuation coverage requirements during the period starting September 1, 2008 through February 28, 2010.

The federal government realizes that there may be some overlap in the groups listed above, creating a situation where individuals may be entitled to multiple notices. The DOL notes providing the Premium Assistance Extension Notice by the earliest date required will satisfy the notice requirement(s).

Additional Information Available

The DOL web site (www.dol.gov/COBRA) now includes updated fact sheets for employers and employees, posters and flyers updated for the provisions extending the COBRA premium reduction included in the Department of Defense Appropriations Act of 2010. Please see the DOL web site for this information and more.

Savitz will monitor this situation to let you know when additional information is available. Check our website regularly for updates on this topic and other emerging regulatory issues.