On January 14, 2010, the Department of Labor ("DOL") published model notices to help plan administrators and employers comply with the revised notice requirements under the Department of Defense Appropriations Act, 2010, (the "Act") which, among other things, extends the eligibility period for and the length of the COBRA premium subsidy (the "Subsidy") introduced last year in the American Recovery and Reinvestment Act of 2009 ("ARRA"). Previously, the DOL published model notices related to the introduction of the Subsidy under ARRA ("ARRA Notices"). The newly-published model notices revise the ARRA Notices. Going forward, plan administrators and employers should use the newly-published model notices in place of the ARRA Notices. Under the requirements of the Act, these updated notices must be sent to certain current and former participants and their dependents by February 17, 2010, or in some cases, even earlier as described below. Plan administrators and employers will likely find the DOL's model notices helpful when preparing their own notices, but may need to customize the notices to fit their organization's specific needs and circumstances.
Below are descriptions of the three model notices the DOL has prepared as well as links to the model notices.
- Updated General Notice. Plans subject to the Federal COBRA provisions must provide an updated general notice ("Updated General Notice") to all qualified beneficiaries (not just covered employees) who experience a qualifying event at any time between September 1, 2008 through February 28, 2010 and have not yet received an election notice. The Updated General Notice must be provided regardless of the type of qualifying event that occurs. The Updated General Notice provides revised information on the Subsidy as well as the standard information required in a COBRA election notice.
- Premium Assistance Extension Notice. Plans subject to Federal COBRA provisions must provide a premium assistance extension notice ("Premium Assistance Extension Notice") to certain individuals who have already been provided a COBRA election notice that did not include the information relating to the Act. The model Premium Assistance Extension Notice includes information about the changes made to the Subsidy by the Act, and must be provided to two separate groups of individuals by February 17, 2010.
- First, the Premium Assistance Extension Notice must be provided to those individuals who were assistance eligible individuals ("AEIs") on October 31, 2009, and individuals who had a termination from employment on or after October 31, 2009 and lost health coverage. These individuals must be provided the Premium Assistance Extension Notice by February 17, 2010.
- Second, the Premium Assistance Extension Notice must be provided to individuals who: (a) previously qualified as an AEI but either did not timely pay the premium for any period of coverage after the individual exhausted the Subsidy or (b) paid the full premium to continue COBRA coverage after the Subsidy ended, within 60 days of the first day they no longer qualify for the Subsidy. For example, the notice must be provided by January 29, 2010 to individuals whose initial nine-month subsidy period ended on November 30, 2009. Plan administrators and employers must only provide the Premium Assistance Extension Notice to these individuals if the Subsidy would continue to apply to the individual due to the extension of the Subsidy from nine to 15 months (and they otherwise remain eligible for the Subsidy).
The DOL has indicated that the groups of individuals listed above may overlap, which could create a situation where an individual may be entitled to receive more than one notice. If so, the plan administrator or employer should provide the Premium Assistance Extension Notice by the earliest date required to satisfy the notice requirement.
- Updated Alternative Notice. Insurance issuers that provide group health insurance coverage must send an updated alternative notice ("Updated Alternative Notice") to individuals who became eligible for continuation coverage under state law requirements. These continuation coverage requirements vary by state and issuers should modify the Updated Alternative Notice to conform it to the requirements of the applicable state.
If you have any questions regarding the preparation of these notices, please contact a member of Parker Poe's Employee Benefits and Executive Compensation group.