In February, 2009, COBRA was amended to add a premium subsidy (to assist certain individuals who had been involuntarily terminated and their families with paying their COBRA premiums) and the Department of Labor issued model notices for use by plan sponsors. In December, 2009 the subsidy was expanded and the Department of Labor recently issued amended model notices to conform to the expansion requirements. Please see http://www.dol.gov/ebsa/COBRA.html#employers.
Premium Assistance Extension Notice (the “Extension Notice”). This is a new notice that includes information on the extension of the subsidy from nine to 15 months and on the right to make retroactive, reduced premium payment(s). The notice must be provided to:
1. Individuals who were receiving the subsidy as of October 31, 2009 (unless they are in a transition period – see group 3 below).
2. Individuals who, on or after October 31, 2009 (but before December 19, 2009), experienced a termination of employment (voluntary or non-voluntary) and were provided a COBRA election notice that did not include information about the subsidy extension. (See “Election Notice” section below for individuals terminating after December 19, 2009.)
The Extension Notice must be provided to individuals in group 1 and 2 above by February 17, 2010.
3. Individuals who are in a “transition period”. Individuals are in a transition period if their 9 months of subsidy ended and they either dropped COBRA coverage (rather than make full premium payments) or made full premium payments in order to maintain COBRA coverage. The individual’s transition period begins on the first day after their 9 months of subsidized coverage ends - provided they otherwise remain eligible for the subsidy (i.e., have not exhausted their COBRA coverage period and have not become eligible for coverage under another group health plan or Medicare).
The Extension Notice must be provided to individuals in group 3 above within the first 60 days of their transition period.
Individuals in a transition period may reinstate their coverage by paying the back premium(s) at the subsidized rate. The back premiums must be paid by the later of February 17, 2010 or 30 days after the Extension Notice is provided to them.
Example: An individual paid subsidized premiums for 9 months ending November 30, 2009 at which time he dropped COBRA. The first day of his Transition Period is December 1, 2009. The Extension Notice is provided to him on January 29, 2010 (the 60th day after the beginning of his Transition Period).
He has until March 1, 2010 (which is the later of February 17, 2010 or 30 days from January 29, 2010) to pay his December and January subsidized premiums.
COBRA Continuation Coverage Election Notice (the “Election Notice”). This notice includes updated information on the subsidy extension as well as information required in a COBRA election notice. The Election Notice must be provided to individuals who have incurred a qualifying event anytime between September 1, 2008 and February 28, 2010 and have not yet received the expanded subsidy information. For qualifying events occurring after December 19, 2009 this notice must be provided within the normal time frame for providing a COBRA election notice.
Continuation Coverage Election Notice (“Alternative Notice”). This is an updated model notice for use by insurers of small group health plans, which are not subject to COBRA but which are subject to state continuation coverage laws.
If you would like assistance customizing a notice or if you have any questions, please call:
James T. Kimble, 410-576-4178
Matthew P. Mellin, 410-576-4047
Robert C. Kellner, 410-576-4239