DOL Publishes Model Notices for COBRA Subsidy Under Stimulus Act to Be Sent by Employers Before April 18

As summarized here on February 23, 2009, the recently enacted American Recovery and Reinvestment Act of 2009 (the “Act”) contains a provision where the federal government will partially subsidize the continuation of medical insurance coverage for involuntarily terminated employees for up to nine months if they are eligible for continued medical coverage under COBRA or similar state law. The continued medical coverage is available to any employee who participates in an employer-sponsored health plan and who is involuntarily terminated after September 1, 2008 but before December 31, 2009 – even if the employee did not initially elect to continue medical coverage after his or her termination. Under the Act, the Department of Labor is required to publicize acceptable model notices by mid-March 2009 and employers are required to send by April 18, 2009 the revised notice to all employees involuntarily terminated since September 1, 2008 (and to other eligible individuals who lost medical coverage between September 30 and February 16). The DOL has recently published on its website the model notices required by the Act and they can be accessed at http://www.dol.gov/ebsa/COBRAmodelnotice.html.

As explained by the DOL, the Act mandates that health “plans notify certain current and former participants and beneficiaries about the premium reduction. The Department created 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 Act’s] notice provisions.”

The DOL has created three potential model notices:

1) The “General Notice (Full version) Plans subject to the Federal COBRA provisions must send the General Notice to all qualified beneficiaries, not just covered employees, who experienced a qualifying event at any time from September 1, 2008 through December 31, 2009, regardless of the type of qualifying event. This full version includes information on the premium reduction as well as information required in a COBRA election notice.”

2) “The Abbreviated General Notice: The abbreviated version of the General Notice includes the same information as the full version regarding the availability of the premium reduction and other rights under [the Act], but does not include the COBRA coverage election information. It may be sent in lieu of the full version to individuals who experienced a qualifying event during on or after September 1, 2008, have already elected COBRA coverage, and still have it.”

3) “Alternative Notice Insurance issuers that provide group health insurance coverage must send the 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 Alternative Notice or the abbreviated model General Notice appropriate for use in certain situations.”

4) “Notice in Connection with Extended Election Periods Plans subject to the Federal COBRA provisions must send the Notice in Connection with Extended Election Periods to any assistance eligible individual (or any individual who would be an assistance eligible individual if a COBRA continuation election were in effect) who:

A. Had a qualifying event at any time from September 1, 2008 through February 16, 2009 [i.e., lost their job and/or medical coverage]; and
B. Either did not elect COBRA continuation coverage, or who elected it but subsequently discontinued COBRA.

Insomniacs can read these provisions of the Act in full at http://www.dol.gov/ebsa/pdf/COBRAPremiumReductionProvision.pdf. The Department of Labor published the new model COBRA notice on its website at http://www.dol.gov/ebsa/cobra.html.