Today, the U.S. Department of Labor released model notices and additional FAQs to assist employers and insurers with administering the COBRA premium assistance provisions of the American Recovery and Reinvestment Act of 2009 (ARRA). As explained in previous SGR client alerts regarding this topic, individuals who are involuntarily terminated between September 1, 2008 and December 31, 2009 with annual incomes of less than $125,000 (single) or $250,000 (couples) are eligible to receive a 65 percent subsidy toward the cost of their COBRA health care premium for up to 9 months. (These individuals are called “assistance eligible individuals” (AEIs) in the DOL guidance.) Employers will receive a credit against payroll taxes for the cost of the subsidy to these AEIs.
Highlights of the Model Notices Released Today by the DOL
On its website (dol.gov), the DOL released several model notices addressing the COBRA premium assistance provisions including:
- General Notice (Full Version). This notice provides a basic overview of the COBRA premium assistance and several attachments, including a COBRA election form, a form to apply for the COBRA subsidy, a form to notify the group health plan that the AEI is no longer eligible for the COBRA subsidy, as well as an optional form to allow AEIs to switch coverage options under a group health plan.
- General Notice (Abbreviated Notice). This notice can be used in place of the general notice for individuals who experience a qualifying event during or after September 1, 2008, but who have elected and are currently participating in COBRA coverage. This notice contains all of the information in the general notice package, except the COBRA election form.
- Notice in Connection with the Extended Election Periods. This notice must be provided to any AEI who had a qualifying event from September 1, 2008 through February 16, 2009, and either did not elect or elected and later dropped COBRA coverage. It explains the second election period which may available to these AEIs.
- Alternative Notice. This notice is provided for use by employers or insurers who provide group health coverage to individuals who became eligible for health care continuation coverage under state law.
The DOL also released some additional FAQs for employers about the COBRA premium assistance provisions under ARRA.
Items of Interest in the Model Forms and Related Information
The new FAQs make it clear that if an individual is eligible for other group health coverage, such as a spouse’s plan, that individual is not eligible for the COBRA subsidy. Additionally, it is now clear that all individuals who experienced a COBRA qualifying event since September 1, 2008 must receive a general notice about their possible rights under ARRA, even if they were not involuntarily terminated. While the DOL has previously mentioned an appeal process, in this new guidance, the DOL announces an expedited appeal process for individuals who are denied the COBRA subsidy. This process may require employers to provide information about denials on a very short time frame. We will provide additional information about this process as it is released by the DOL.