DOL ISSUES REVISED MODEL COBRA NOTICES

As discussed in our December E-Update, the federal subsidy for COBRA benefits, which was scheduled to end on December 31, was extended by recent legislation (from a maximum of nine months to a new maximum of 15 months). This legislation requires certain updated notices to be provided to specific groups of eligible individuals. The DOL has now issued model notices to assist employers in complying with these requirements.

- Updated General Notice. Covered plans must provide this notice to all qualified beneficiaries who experienced any type of qualifying event at any time from September 1, 2008 through February 28, 2010, and who have not yet been provided a COBRA election notice. (The DOL notes that certain individuals who were terminated in December 2009 but were/are not eligible for COBRA coverage until January 2010 likely did not receive the proper notice. These individuals should be provided this updated notice and given 60 days from the date that this notice was provided to make a COBRA election).

- Premium Assistance Extension Notice. Covered plans must provide this notice to individuals who received a COBRA election notice that did not include information regarding the extended subsidy. The following individuals must be given this new notice:

o Individuals who on or after October 31, 2009 are “assistance eligible individuals” and individuals who experience a qualifying event (i.e. termination of employment with loss of health coverage) on or after October 31, 2009. This notice must be provided by February 17, 2010 or, if the qualifying event occurs after December 19, 2009 (when the new law was enacted), in compliance with the timing requirements set forth in the COBRA regulations.

o Those who are in a "transition period" which is the period beginning immediately after the end of the maximum number of months of subsidy benefits prior to the enactment of the new law (typically 9 months). An individual is considered in a transition period if (1) he/she ceased paying COBRA premiums at the end of the original nine-month subsidy period and lost coverage or (2) he/she paid the full, unsubsidized, premiums following the original expiration of the subsidy period. The notice is intended to inform such individuals of the opportunity to reinstate coverage with the subsidy or, if they paid the full premium, receive a credit or refund for the overpayment. This notice must be provided within 60 days of the first day of the transition period.

The DOL notes that the groups may overlap. In such cases, the Premium Extension Notice should be provided by the earliest date (i.e. February 17) to meet the requirements of the law.

January 15, 2010

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