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Sunday, March 22, 2009

New Model COBRA Notices

New Model COBRA Notices and Forms Issued
Reprint - Opelika & Auburn News, Mar. 22

On Friday March 19 the United States Department of Labor (“DOL”) released model notices and application forms to be used by employer-sponsored health plans and individuals electing COBRA in connection with the American Recovery and Reinvestment Act of 2009 (“ARRA”) COBRA premium subsidy. Employers and group health plans must quickly notify current and former plan participants about the COBRA premium subsidy. Customizable DOL model notices and forms are available at: http://www.dol.gov/ebsa/COBRAmodelnotice.html.
There are several different model notices for use by employers (together with application forms for COBRA qualified beneficiaries to complete and return to get the 65% subsidized COBRA premium):
  • New 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, AND who either have not yet been provided an election notice or who were provided an election notice on or after February 17, 2009 that did not include the additional information required by ARRA. This full version includes information on the premium reduction as well as information required in a COBRA election notice.
  • General Notice (Abbreviated version). 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 ARRA, 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.
  • 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. (Alabama has no such State Law)
    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: (1) Had a qualifying event at any time from September 1, 2008 through February 16, 2009; and (2) Either did not elect COBRA continuation coverage, or who elected it but subsequently discontinued COBRA. This notice includes information on ARRA’s additional election opportunity, as well as premium reduction information. This notice must be provided by April 18, 2009.
Practical Counsel: All model notices and forms must be modified for use with your group health plan by inserting specific information and deleting inapplicable provisions. It is recommended that all notices be sent using the “proof of mailing” service available at the U.S. Post Office to avoid claims that you did not post in a timely manner. Penalties are $110 a day. The subsidy is an employer Federal Payroll Tax Credit on new IRS Form 941. ARRA could not be more complicated and there are multiple twists and turns based upon the facts of your Company’s particular situation and the manner in which the involuntary separation occurred.

Tommy Eden is a Lee County native, an attorney with the local office of Constangy, Brooks & Smith, LLP and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at teden@constangy.com or 334-246-2901. Blog at www.alabamaatwork.com