As you know all too well, the American Recovery and Reinvestment Act ("ARRA") provided a government-paid subsidy for the payment of premiums by employees whose employment was involuntarily terminated between September 1, 2008 and December 31, 2009, for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act ("COBRA") and state continuation coverage laws for certain group health plans. Please see our Client Advisory dated February 24, 2009, for more information about this subsidy.
On March 19, 2009, the Department of Labor (DOL) issued four model notices that can be used by plans and plan administrators to satisfy the ARRA notice requirements. Those model notices are linked here for your use, and are explained below:
- General Notice - Full Version: Plans subject to Federal COBRA laws must send the General Notice to all qualified beneficiaries (note, this includes 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 - Short Version: The short version of the General Notice includes the same information as the full version regarding the availability of the premium subsidy and other rights under ARRA, but it does not include the COBRA coverage election information. This short version may be sent in lieu of the full version to individuals who experienced a qualifying event on or after September 1, 2008, who already have elected COBRA coverage, and who still maintain their COBRA coverage.
- Alternative Notice for Insurance Company Issuers: Insurance issuers that provide group health insurance coverage must send this Alternative Notice to individuals who became eligible for continuation coverage under State law. Insurance issuers will need to modify this model notice for each State's specific laws.
- Extended Election Period Notice: Plans subject to Federal COBRA laws must send the Notice in Connection with Extended Election Periods to any assistance eligible individual and to any individual who would be an assistance eligible individual if a COBRA continuation election were in effect for that individual, who:
- Experienced a qualifying event at any time from September 1, 2008 through February 16, 2009; and
- 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. Employers and plan administrators should continue to monitor the IRS
websites for additional guidance on the COBRA premium subsidy.
If you haven't already done so, steps should be taken to determine those individuals who must receive the notices described above, and to ensure that the required notices are sent by April 18, 2009.
If you have any questions about these regulations, please contact any member of our Employee Benefits Team
Sherman & Howard has prepared this advisory to provide general information on recent legal developments that may be of interest. This advisory does not provide legal advice for any specific situation. This does not create an attorney-client relationship between any reader and the firm. If you want legal advice on a specific situation, you must speak with one of our lawyers and reach an express agreement for legal representation.
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©2009 Sherman & Howard L.L.C. March 19, 2009