01/15/2010

Employee Benefits Alert: Department of Labor Issues Model Notices to Comply With COBRA Premium Subsidy Requirements

Recently, the Department of Defense Appropriations Act, 2010 (the 2010 DOD Act), modified the American Recovery and Reinvestment Act of 2009 (ARRA) in the following major respects:

Extended the COBRA premium reduction eligibility period for those covered employees who experience an involuntary termination from December 31, 2009, to February 28, 2010; and
Increased the maximum period for receiving the subsidy from nine to 15 months.

ARRA, as amended by the 2010 DOD Act, requires that new notices be given to certain participants and beneficiaries regarding the premium reduction. The Department of Labor (the DOL) has recently issued new model notices to comply with this requirement. Links to the model notices can be found here. There are three types of new Notices: (1) the General Notice; (2) the Premium Assistance Extension Notice; and (3) the Alternative Notice. The notices are designed for specific groups of individuals as follows:

The General Notice should be provided to all qualified beneficiaries, who have not been provided an election notice, and who experience any qualifying event between September 1, 2008 and February 28, 2010.
The Premium Assistance Extension Notice should be provided to those individuals who have received a COBRA election notice that did not include the information regarding ARRA, as amended. This notice pertains to three categories of individuals as follows: (1) “assistance eligible individuals” as of October 31, 2009, unless in a "transition period"; (2) individuals who experienced a termination of employment on or after October 31, 2009; and (3) individuals in a "transition period," defined as that period immediately following the end of the nine month period of premium reduction available under ARRA prior to its amendment. For categories (1) and (2) the notice must be provided by February 17, 2010. For category (3) the notice must be provided within 60 days of the first day of the transition period.
The Alternative Notice should be sent to those individuals who became eligible under state law for continuation coverage. The Alternative Notice requires modification in order to comply with the varying state law requirements for continuation coverage.

Where there is overlap between the General Notice and the Premium Assistance Extension Notice, providing the Premium Assistance Extension Notice by the earliest date required is sufficient.

For additional information regarding the new premium subsidy requirements, please contact Tom Brous at 816.691.3368, Tom Dowling at 816.691.3469 or Sam Wilkerson at 816.691.2674.