The American Economic Recovery and Reinvestment Act of 2009 (“ARRA”) provides a 65% subsidy for COBRA premiums, for individuals who become eligible for COBRA coverage due to an involuntary termination of employment (other than for gross misconduct) occurring from September 1, 2008 through December 31, 2009. The subsidy is provided for 9 months, starting March, 2009. ARRA requires employers and insurers to provide certain notices pertaining to the subsidy, some of them by the upcoming April 18. To make the subsidy available, any individual who is eligible for the subsidy, but who on February 17, 2009 is not receiving COBRA coverage, must now be given a new opportunity to elect to receive COBRA coverage and thus take advantage of the subsidy. The period during which this election may be made is referred to as the “Extended Election Period”.
Pursuant to ARRA, the Department of Labor earlier issued the following 4 model notices, which employers and insurers may adopt or use in meeting these notice requirements:
- General Notice (Full Version)-intended to be used by plans subject to the Federal COBRA provisions, and to be provided to all qualified beneficiaries, not just those eligible for the subsidy, who experienced a qualifying event at any time from September 1, 2008 through December 31, 2009, and who either have not yet been sent a COBRA election notice or were sent a COBRA election notice on or after February 17, 2009 that did not include information required by ARRA pertaining to the subsidy.
- General Notice (Abbreviated version)-intended to be used by the same plans and to include the same information as the full version, but does not include any information on COBRA coverage elections. It may be sent in lieu of the full version to individuals who experienced a qualifying event on or after September 1, 2008, have already elected COBRA coverage, and still have it.
- Alternative Notice– intended to be used by insurers that provide group health insurance coverage, and to be sent to individuals who became eligible for continuation coverage under a State law.
- Notice in Connection with Extended Election Periods-intended to be used by plans subject to the Federal COBRA provisions, and to be sent to any individual who:
- had a qualifying event that was an involuntary termination of employment at any time from September 1, 2008 through February 16, 2009; and
- either (as of February 17, 2009) had not elected COBRA continuation coverage, or had elected it but subsequently discontinued COBRA.
The Department of Labor has put “Premium Reduction FAQs” on its website which provide guidance on the COBRA subsidy, and has updated these FAQs on April 2 to provide additional guidance on the use of the model notices. Note that, in some case, more than one of the notices must be provided to an individual. See FAQs #23 and 24.