Model COBRA Subsidy Notices Released


The American Recovery and Reinvestment Act of 2009 included some relief for laid-off employees. One of the biggest is a 65% subsidy for the payment of health plan payment from the government for certain eligible participants in COBRA health plan continuation coverage. ARRA mandates that health plans notify certain current and former participants and beneficiaries about this premium reduction.

The Department of Labor created and published model notices to help plans comply with these new requirements. Each model notice is designed for a particular group of qualified beneficiaries and contains information to help satisfy ARRA’s notice provisions.

General Notice – Full version (.doc) 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.

General Notice – Abbreviated version (.doc)  This version may be sent instead of the full version to individuals who experienced a qualifying event sometime on or after September 1, 2008, have already elected COBRA coverage, and still have it. This abbreviated version of the General Notice includes the same information as the full version regarding the availability of the premium reduction under ARRA, but does not include the COBRA coverage election information.

Alternative Notice (.doc) Insurance issuers that provide group health insurance coverage must send this 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.

Notice in Connection with Extended Election Periods (.doc) Plans subject to the Federal COBRA provisions must send this Notice 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.

Unfortunately, the new information does not provide guidance on the definition of what constitutes an “involuntary termination” for purposes of the new COBRA premium subsidy. I have heard that the IRS is working on this guidance and may make it available in the next two weeks.