By Rick A. Hanrahan
On February 17, 2009, the President signed the American Restoration and
Recovery Act (“the Act”) into effect. The Act makes significant changes
to the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”), and mandates that plans notify assistance-eligible
individuals (e.g. certain employees and qualified beneficiaries) of
their COBRA rights to receive a 65% subsidy on their premium payments.
The Department of Labor (“DOL”) just recently issued its model
notices to help plans and individuals comply with COBRA’s new
requirements. Each model notice is designed for a particular group of
assistant-eligible individuals and contains information to help satisfy
the Act’s notice requirements.
The three notices include: (1) a general notice (full and
abbreviated version); (2) alternative notice; and (3) notice in
connection with extended election periods.
The general notice should be used for assistance eligible
individuals who experienced a qualifying event at any time from
September 1, 2008 through December 31, 2009, regardless of the type of
qualifying event. The full version includes information on the premium
reduction as well as information required in a COBRA election notice.
The abbreviated version includes the same information as the full
version regarding the availability of the premium reduction and other
rights under the Act, but does not include the COBRA coverage election
information. The abbreviated version may be used in lieu of the full
version for individuals who experienced a qualifying event during, on,
or after September 1, 2008, already elected COBRA coverage, and still
have coverage.
The alternative notice should generally be used by insurance
issuers that provide group health insurance coverage to persons who
became eligible for continuation coverage under a state law.
The notice in connection with extended election periods should
be used for individuals who: (1) had a qualifying event at any time from
September 1, 2008 through February 16, 2009; and (2) Either did not
elect COBRA continuation coverage, or who elected it but subsequently
discontinued COBRA. Employer must provide this notification by April 18, 2009.
Failure to provide proper notice to assistant eligible
individuals could subject the employer or plan to a penalty of up to
$110 per day under ERISA § 502(c)(1) and/or other penalties.
To retrieve the DOL’s model notices, go to:
http://www.dol.gov/ebsa/COBRAmodelnotice.html.
For more details on the changes to COBRA read our firm’s prior alerts:
“The COBRA Clutch: The Stimulus Bill Alters COBRA"; and “IRS Releases Updated Form 941 For Employers To Report Cobra Premium Assistance Payments”.
As always, do not hesitate to contact our certified employment attorneys at Zashin & Rich for further details.
