DOL Updates Model Notices for COBRA Subsidy Extensions
The Department of Labor just released updated COBRA Model Notices that reflect the COBRA subsidy extension.
On December 19, 2009, President Obama signed the Department of Defense Appropriations Act, 2010 (DDAA) into law. The DDAA amends the American Recovery and Reinvestment Act of 2009 (ARRA) increasing the maximum COBRA subsidy period from nine months to fifteen months. In addition, the eligibility period is extended by two months to February 28, 2010.
The Department of Labor (DOL) has released updated COBRA Model Notices to help plans satisfy the new notice requirements reflecting the COBRA subsidy extension. Three different model notices are available, each designed to address a particular group of qualified beneficiaries or a particular statutory notice requirement. The first two notices are updates of model notices issued last Spring and should be used going forward. The third model notice addresses two different groups, as explained further below. Employers should take action immediately to ensure that information is timely delivered.
The notices can be found here.
Click here to view the text of the Announcement of Publication of Revised COBRA Model Notices, including Review of Proper Usage.
Updated General Notice
Plans subject to the Federal COBRA provisions must provide the updated General Notice to all qualified beneficiaries who experienced a qualifying event from September 1, 2008 through February 28, 2010. This model notice includes updated information on the premium reduction as well as information required in a COBRA election notice.
Updated Alternative Notice
This notice is intended to be used as a model for plans subject to continuation of coverage requirements under State insurance law rather than Federal COBRA. Because continuation of coverage requirements vary, the DOL expects that users will modify the model Alternative Notice to comply with applicable State law.
Premium Assistance Extension Notice
This notice has been designed to provide information about the premium subsidy extension to the following two groups of Assistance Eligible Individuals (AEIs):
1) Individuals who were AEIs as of October 31, 2009 and individuals who experienced a termination of employment on or after October 31, 2009 and lost health insurance coverage (unless they were already provided a timely, updated General Notice) must be provided a notice by February 17, 2010.
2) Individuals whose original nine months of COBRA subsidy ended prior to December 19, 2009 and who are still eligible for some portion of the extended fifteen months of COBRA subsidy must be provided a notice prior to February 19, 2010. Individuals whose nine months of COBRA subsidy ends on or after December 19, 2009 must be notified within 60 days of the termination of their nine month COBRA subsidy period.
Premium Assistance Extension Notice
Notice of Extended Payment Grace Period
The Premium Assistance Extension Notice may also be used to notify AEIs who are in a “transition period”. Such individuals may be entitled to an extended premium payment grace period. For this purpose, an individual's "transition period" began on the day after the individual's original nine months of subsidized coverage expired. To be entitled to the extended payment grace period, an individual must have kept his or her COBRA coverage (and remained subsidy-eligible) through the end of the original nine month subsidy period and then either dropped his or her COBRA coverage or began paying the full COBRA premium.
Any such individual who chose to drop COBRA coverage (rather than pay the full premium) may now retroactively reinstate that coverage by paying the subsidized premium amount during an extended grace period. The end of this extended grace period depends on when the individual receives the Extension Notice. The Notice must be provided to these individuals within 60 days of the beginning of their transition period. Individuals who began receiving the premium subsidy as of March 1, 2009 (when the subsidy first became available), will have completed their first nine months of subsidized coverage on November 30, 2009. Their transition period began on December 1, 2009 and the deadline for receiving the Extension Notice will be January 29, 2010 (i.e., 60 days later). Such an individual will then have until February 17, 2010 (or, if later, 30 days after the Notice is provided) to make retroactive premium payments for any prior months of COBRA coverage during their transition period.
Treatment of Overpayments
The Premium Extension Notice also explains the options available to those subsidy-eligible individuals who chose to pay the full COBRA premium for any months of coverage during their transition period. As when the subsidy was first enacted, these individuals may now either receive a refund of any overpayment or have that overpayment applied to pay COBRA premiums for future months of coverage.
