The Department of Labor has just released several model
notices (including election forms) to reflect the new
COBRA subsidy requirements of ARRA, the American
Recovery and Reinvestment Act of 2009. (These new
COBRA subsidy provisions were discussed in our
Employee Benefits Alert published on February 18,
ARRA provides COBRA premium assistance for lower and
middle-income employees who are involuntarily
terminated between September 1, 2008 and December
31, 2009, as well as their spouses and dependent
children ("assistance eligible individuals.") The new
model notices are intended to help employers comply
with the notice provision requirements of ARRA.
The model forms intended for employer, rather than
insurer, use are described below. Upon reading
the notices, it does appear that they may have been
prepared in haste, as there is some ambiguity as to who
should receive the general notice.
(1) COBRA Continuation Coverage Election Notice (Full
This is the general notice that employers and the group
health plans they sponsor are directed to provide to
qualified beneficiaries (employees as well as spouses
and dependents) who experience any kind of COBRA
qualifying event from September 1, 2008 through
December 31, 2009. This notice takes the place of the
former general notice provided by the Department of
Labor, while incorporating information about ARRA's
It appears from the Department of Labor heading on
this notice that it is to be provided to all qualified
beneficiaries who have any kind of qualifying event
(involuntary termination as well as other events), so
long as that event took place between September 1,
2008 and December 31, 2009. However, provision of
this notice should, from a common sense point of view,
be subject to the carve-out of certain groups of qualified
beneficiaries, who should receive the notices described
in (2) and (3) below.
(2) COBRA Continuation Coverage Election Notice
This notice is similar to the general notice described in
(1) above, except that it does not include the general
COBRA coverage election information. According to the
Department of Labor, it can be sent instead of the full
general notice described in (1) above, to a key subset of
individuals who (i) experienced a qualifying event on or
after September 1, 2008, and (ii) already elected COBRA
coverage. It notifies such individuals of their new rights
under ARRA, advises them whether they are assistance
eligible individuals, and gives them forms to elect less
expensive coverage and to elect subsidy coverage as
assistance eligible individuals — but does not require
them to fill out basic COBRA election forms all over again.
(3) COBRA Continuation Coverage Additional Election
Notice for Extended Election Periods
Employers and the group health plans they sponsor
should use this notice in special cases, for another key
subset of COBRA qualified beneficiaries — those who are
(or would have been) "assistance eligible individuals,"
but for their failure to enroll in COBRA coverage.
The notice should be provided both to (i) qualified
beneficiaries with qualifying events from September 1,
2008 through December 31, 2009 who never elected
COBRA coverage, and (ii) qualified beneficiaries with
qualifying events from September 1, 2008 through
December 31, 2009 who did elect COBRA coverage,
but subsequently discontinued it. This is the notice
that informs such qualified beneficiaries, if they are
assistance eligible individuals, of their second chance
to elect COBRA coverage, a key feature of the subsidy
provisions of ARRA.
Customization of Model Notices
Although these forms are Department of Labor "models,"
none of them can be described as "plug 'n' play." Each
notice requires substantial customization to conform
to the terms of a company's group health plan, and its
wishes regarding certain optional provisions, such as the
ability for assistance eligible individuals to switch from a more expensive COBRA coverage alternative to a less
expensive one. By close of business Monday, March 23,
Fenwick & West LLP will have the model forms available
for customization and distribution to interested clients.
While the forms are long and complex, clients should
use them as provided, in case important information
might be inadvertently omitted if the forms were altered
or shortened. So long as the complete Department of
Labor model notices are used, it is more likely that clients
would be able to withstand a DOL audit.
The full version of the notice described in (1) should
be provided on a prospective basis to all new qualified
beneficiaries who have any qualifying event (not just an
involuntary termination) through December 31, 2009. Any
recent qualified beneficiaries who have not yet received
any COBRA notice and election form, or who were
provided an election notice and form that did not meet
the requirements of the ARRA, should also receive this
notice. The abbreviated version described in (2) should
be provided no later than April 18, 2009 to qualified
beneficiaries who experienced a qualifying event on or
after September 1, 2008 and then elected (and did not
discontinue) COBRA coverage. The Additional Election
Notice for Extended Periods described in (3) should
be provided no later than April 18, 2009 to qualified
beneficiaries who experienced a qualifying event on
or after September 1, 2009 and who either did not
elect COBRA coverage, or elected such coverage but
subsequently discontinued it.
More information can be found at http://www.dol.gov/dol/topic/health-plans/cobra.htm#doltopics.
For more information you may contact:
Mona A. Clee, Of Counsel
Employee Benefits Group, Corporate Group,
Employment & Labor Group
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developments in the law. It is not intended, and should not be regarded,
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