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On March 19, 2009, the U.S. Department of Labor issued four model notices to assist group health plans and other entities in providing certain COBRA notices required by the American Recovery and Reinvestment Act (ARRA). These notices are to be used to inform plan participants entitled to health care continuation coverage under federal or state law of their possible right to the COBRA premium subsidy and an additional COBRA election period provided under ARRA. These rights generally apply to those individuals who had coverage under a group health plan and lost that coverage as a result of an involuntary termination of employment between September 1, 2008 and December 31, 2009.
The COBRA notices may be found at the following site: www.dol.gov/COBRA.
The COBRA notices are:
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Model General Notice (Full Version)—This is to be used by individuals who have not previously received a COBRA election form and whose qualifying event occurred or occurs sometime between September 1, 2008 and December 31, 2009. It is designed to inform qualified beneficiaries of their possible right to the COBRA premium subsidy. This notice is to be sent to ALL qualified beneficiaries described in this model notice, not just individuals whose qualifying event is an involuntary termination of employment. It also needs to be sent to individuals who received a COBRA notice on or after February 17, 2009 that did not contain the information required by ARRA.
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Model General Notice (Abbreviated Version)—This is to be used by individuals who have elected and still have COBRA coverage and whose qualifying event occurred or occurs sometime between September 1, 2008 and December 31, 2009. Like the full version, this notice is intended to advise qualified beneficiaries of their possible right to the COBRA premium subsidy. This notice is to be sent to ALL qualified beneficiaries described in this model notice, not just individuals whose qualifying event is involuntary termination of employment.
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Model Notice in Connection with Extended Election Periods—This is for individuals who previously were given the opportunity to elect COBRA and either did not elect or later dropped it. This form is to be used by individuals to give them another chance to obtain COBRA coverage. This notice is not for individuals whose continuation coverage is provided pursuant to state law.
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Model Alternative Notice—This is designed for individuals who have continuation coverage rights under state law, but not Federal COBRA. Again, it is designed to advise state qualified beneficiaries of their possible right to a continuation coverage premium subsidy. This notice is not to be confused with the right of group health plans subject to Federal COBRA to offer alternative coverage to qualified beneficiaries under ARRA. This notice must be given to ALL state qualified beneficiaries described in this model notice who experienced a qualifying event between September 1, 2008 and December 31, 2009. Note state law may not use the terms “qualified beneficiaries” and “qualifying events.” If your plan is subject to Federal COBRA, you can ignore the Model Alternative Notice.
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Accompanying the two Model General Notices and Model Notice in Connection with Extended Election Periods are:
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a document entitled “Summary of the COBRA Premium Reduction Provisions under ARRA” which describes the premium subsidy available to “assistance eligible individuals,”
- a form which individuals may use to ask to be treated as “assistance eligible individuals” and
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a form to be used by assistance eligible individuals who subsequently become ineligible for the COBRA premium subsidy to provide notification of loss of eligibility.
Similar forms are also provided with the Model Alternative Notice.
The Model General Notice (Full Version) is intended to satisfy not only the requirement of ARRA but also the regular requirements of COBRA.
The notices are only models and will need to be tailored to the particular needs of each group health plan. Particularly with respect to the Model General Notice (Full Version), the plan administrator will need to decide whether to use its current form to be supplemented by parts of this Model General Notice or to substitute this model for its own form in toto.
Each of the notices has built into it the option for an alternative level of coverage if made available by the group health plan. If there is no such option, all references to it in the notice and in the accompanying election form should be removed to avoid confusion.
The Model Alternative Notice will need the most tailoring because it is state specific. Its issuance is the obligation of the “issuers that offer group health insurance coverage.” Presumably, this is not the employer or association to whom the health insurance policy/contract/certificate is issued, but we are aware that some insurers may question this interpretation that the insurer is responsible.
The Model Notice in Connection with Extended Election Periods clarifies the issue as to when payment has to be made. The initial continuation coverage payment has to be made within 45 days of the election. The notices, however, do not shed light on several key issues including what “involuntary termination” means, what is “comparable” state coverage and how appeals are to be handled. In a joint IRS/DOL webinar on March 24 following the release of the model notices, the speakers indicated that involuntary termination would be interpreted broadly. The Model Notice in Connection with Extended Election Periods or the equivalent must be sent by April 18, 2009. In the webinar mentioned above, one of the speakers said there was no specific time by which the Model General Notice (Abbreviated Version) needed to be sent but indicated April 18 would be considered reasonable. Nonetheless, we strongly recommend that the Model General Notice (Abbreviated Version) should also be sent by April 18, 2009. The Model General Notice (Full Version) will need to be sent to qualified beneficiaries to start the running of the regular 60 day COBRA election period. The explanatory comments accompanying the model notices do not set forth a deadline for sending the Model Alternative Notice to state qualified beneficiaries. |
