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Benefits Law
Alert
DEPARTMENT OF LABOR RELEASES UPDATED COBRA MODEL
NOTICES
by Ellen
Hoeppner
On May 11, 2010, the Department of Labor ("DOL") published
updated model notices for subsidized continuing health care coverage
under the Consolidated Omnibus Budget Reconciliation Act
("COBRA").
Under the American Recovery and Reinvestment Act of 2009
("AARA"), individuals who become eligible for continuing
health care coverage rights under COBRA because they were
involuntarily terminated from their jobs are required to pay only 35
percent of the COBRA premium, rather than the usual 102 percent of
premium. The remaining percentage is subsidized by the
employer, which is then reimbursed by the federal government through
a payroll tax credit. The subsidy originally was scheduled to
expire December 31, 2009, but Congress has extended it until May 31,
2010.
ARRA, as amended by the Continuing Extension Act of 2010
("CEA"), mandates that group health plans notify certain
current and former participants and beneficiaries about the COBRA
premium reduction. The DOL has created model notices to assist group
health plans and employers in complying with these requirements.
The DOL has issued the following model notices:
Plans subject to the Federal COBRA provisions must
provide the updated General Notice to all qualified beneficiaries who
experienced a qualifying event at any time from September 1, 2008
through May 31, 2010, regardless of the type of qualifying event, and
who have not yet been provided an election notice. This model notice
includes updated information on the premium reduction, as well as
information required in a COBRA election notice.
Alternative
Notice
Insurance issuers that offer group health insurance
coverage that is subject to comparable continuation coverage
requirements imposed by State law must provide the Alternative Notice
to all qualified beneficiaries who have experienced a qualifying
event any time from September 1, 2008 through May 31,
2010. However, because continuation coverage requirements vary
among States, the model notice should be further modified to reflect
the requirements of the applicable State law.
Notice of New
Election Period
Plans subject to continuation coverage provisions under
Federal or State law should provide, within 60 days of the date of
the termination of employment, a Notice of New Election Period to all
individuals who: (i) experienced a qualifying event that was a
reduction in hours at any time from September 1, 2008 through May 31,
2010, (ii) subsequently experience a termination of employment at any
time from March 2, 2010 through May 31, 2010, and (iii) either did
not elect continuation coverage when it was first offered or elected
but subsequently discontinued the coverage.
Supplemental
Information Notice
Plans that are subject to continuation coverage
provisions under Federal or State law should provide the Supplemental
Information Notice to all individuals who elected and maintained
continuation coverage based on the following qualifying events: (i)
all qualifying events related to a termination of employment that
occurred from March 1, 2010 through April 14, 2010 for which notice
of the availability of the premium reduction available under ARRA was
not given; or (ii) reductions of hours that occurred during the
period from September 1, 2008 through May 31, 2010 which were
followed by a termination of the employee's employment that occurred
on or after March 2, 2010 and by May 31, 2010.
Notice of
Extended Election Period
Plans that are subject to continuation coverage
provisions under Federal or State law must provide, before the end of
the required time period for providing a COBRA election notice, the
Notice of Extended Election Period to all individuals who: (i)
experienced a qualifying event that was a termination of employment
at some time from April 1, 2010 through April 14, 2010, (ii) were
provided notice that did not inform them of their rights under ARRA,
as amended by CEA, and (iii) either chose not to elect COBRA
continuation coverage at that time or elected COBRA but subsequently
discontinued that coverage.
The model
notices are available on the DOL's website at: http://www.dol.gov/ebsa/COBRAmodelnotice.html.
If
you have any questions please contact: Edward C. Hammond at
(248) 988-1821 - ehammond@clarkhill.com
, John P. Schneider at (616) 608-1108 - jschneider@clarkhill.com
or Kristi R. Gauthier at (248) 988-5854 - kgauthier@clarkhill.com or
the contributor, Ellen Hoeppner at (313 965-8262 - ehoeppner@clarkhill.com.
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