President Obama recently signed the Continuation Extension Act of 2010 (the "Act") into law. The Act extends the eligibility period for individuals to qualify for the COBRA premium subsidy (the "Subsidy") through May 31, 2010. The Act also provides transition relief to those individuals who were involuntarily terminated or experienced a reduction in hours followed by an involuntary termination on or after April 1, 2010 but before April 14, 2010 that allows such individuals to receive the Subsidy if they otherwise qualify for it. In response to the passage of the Act, the DOL has also posted updated model COBRA notices and a COBRA Fact Sheet on their website.

The Act is retroactive to April 1, 2010 and extends the eligibility period for individuals to qualify for the Subsidy. Introduced last year in the American Recovery and Reinvestment Act of 2009 ("ARRA") and extended twice already in the Department of Defense Act of 2010 ("DODA") and the Temporary Extension Act of 2010 ("TEA"), the Subsidy aids "assistance eligible individuals" ("AEIs") who are involuntarily terminated by requiring an AEI's former employer (or insurer, as applicable) to pay 65% of the AEI's portion of the COBRA premium for continued group health plan benefits for up to 15 months. ARRA defined an AEI as an individual who is eligible for COBRA coverage because of an involuntary termination from employment that occurred during the period from September 1, 2008 through December 31, 2009. Next, DODA extended the date an individual may be involuntarily terminated through February 28, 2010, and then TEA: (i) extended the eligibility period for individuals to qualify for the Subsidy through March 31, 2010, (ii) clarified that the Subsidy is available to individuals who experience a loss of group health coverage due to a reduction in hours that is followed by an involuntary termination and (iii) made several other changes and clarifications. 

Now, with the enactment of the Act, the Subsidy will be available to individuals who are involuntarily terminated or experience a loss of hours followed by an involuntary termination on or after March 2, 2010 through May 31, 2010. Additionally, the Act provides a transition period for individuals who experienced an involuntary termination of employment or a loss of hours followed by an involuntary termination on or after April 1, 2010 but before April 14, 2010 that allows such individuals to receive the Subsidy if they otherwise qualify for it. The Act requires that the plan administrator notify these individuals by June 15, 2010 about their rights under ARRA, including the Subsidy, and allow them the opportunity elect COBRA coverage for 60 days after they receive such notice.

In response to the changes brought by the Act, the DOL posted updated model COBRA notices and a COBRA Fact Sheet on their website. The model notices are as follows:

General Notice -- Plans subject to federal COBRA provisions must provide a General Notice to all qualified beneficiaries, not just covered employees, who experienced a qualifying event at any time from September 1, 2008 through May 31, 2010, regardless of the type of qualifying event, and who have not yet been provided an election notice. This notice must be provided before the end of the required time period for providing a COBRA election notice, generally within 60 days of experiencing a COBRA-qualifying event. Individuals who experienced a qualifying event that was a termination of employment from April 1, 2010 through April 14, 2010 may not have been provided proper notice. Those individuals who have not been provided any notice must get the updated General Notice and receive the full 60 days from the date the updated General Notice is proved to make a COBRA election.
 
Notice of New Election Period -- Plans that are subject to COBRA continuation provisions under federal or state law should provide a Notice of New Election Period to all individuals who:

• experienced a qualifying event that was a reduction of hours at any time from September 1, 2008 through May 31, 2010;
• subsequently experience a termination of employment at any point from March 2, 2010 through May 31, 2010;
• and either did not elect COBRA continuation coverage when it was first offered or elected but subsequently discontinued COBRA.

Plan administrators should provide this notice to these individuals within 60 days of the individual's termination from employment. Additionally, for individuals terminated from April 1, 2010 through April 14, 2010, the Notice of New Election Period should be provided.
 
Supplemental Information Notice -- Plans that are subject to COBRA continuation provisions under federal law and insurers subject to continuation coverage requirements under state law must provide the Supplemental Information Notice. It should be provided to all individuals who elected and maintained continuation coverage based on the following qualifying events:

• terminations of employment that occurred at some time on or after March 1, 2010 through April 14, 2010 for which notice of the availability of the Subsidy available under ARRA was not given;
• or reductions of hours that occurred during the period from September 1, 2008 through May 31, 2010 which were followed by a termination of the employee's employment that occurred on or after March 2, 2010 and by May 31, 2010.

Plan administrators should provide this Notice to the individuals discussed in the first category above before the end of the required time period to provide a COBRA election notice. For individuals discussed in the second category, the notice must be provided within 60 days of the individual's termination from employment.

Notice of Extended Election Period -- Plans that are subject to COBRA continuation provisions under federal law and insurers subject to continuation coverage requirements under state law must provide the Notice of Extended Election Period. It must be provided to all individuals who experienced a qualifying event that was a termination of employment from April 1, 2010 through April 14, 2010, were provided notice that did not inform them of their rights under ARRA, as amended by the Act, and either chose not to elect COBRA continuation coverage at that time or elected COBRA but subsequently discontinued that coverage. Plan administrators or insurers must provide this notice before the end of the required time period for providing a COBRA election notice.
 
Alternative Notice -- Insurance issuers that provide group health insurance coverage must provide notice to persons who became eligible for continuation coverage under state law. The Department updated its model Alternative Notice to assist issuers with satisfying this requirement. However, 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 one (or more) of the other models appropriate for use in certain situations.
 
The DOL also posted an updated COBRA Fact Sheet that provides a summary of information regarding the changes made by ARRA and its subsequent extension, including the Act. The COBRA Fact Sheet may be accessed here.
  
In light of the passage of the Act, plan sponsors should review their COBRA compliance materials and update them to reflect the extended eligibility period for individuals to qualify for the Subsidy through May 31, 2010. Additionally, plan sponsors need to update their organization's COBRA notices and be sure to properly notify those individuals who experienced an involuntary termination of employment on or after April 1, 2010, but before April 14, 2010 of their rights under ARRA, including the Subsidy, before June 15, 2010.