COBRA Deadline Approaching: Individuals Who Experienced a Qualifying COBRA Event Prior to February 17, 2009 Must Receive a Notice Outlining the Premium Assistance Available Under ARRA No Later than April 18, 2009

On February 17, 2009, the American Recovery and Reinvestment Act of 2009 (ARRA) was enacted.   Included in ARRA is a government subsidy for COBRA premiums for individuals who have lost group health plan coverage due to an involuntary termination of employment[i] from September 1, 2008 through December 31, 2009. The premiums subsidy will last for up to 9 months.  Those individuals who have experienced a qualifying event entitling them to COBRA since September 1, 2008 must receive a notice outlining the COBRA premium assistance available under ARRA.  Plans are required to provide this notice no later than April 18, 2009 for those individuals whose qualifying event occurred prior to February 17, 2009.

On March 19, 2009, the DOL issued model notices, guidance and FAQs for both employers and employees regarding the COBRA premium assistance under ARRA (available at www.dol.gov/COBRA).   ARRA mandates the provision of three notices – a “General Notice,” an “Alternative Notice,” and a “Notice in Connection with Extended Election Periods.”

The “General Notice” is required to be sent by plans that are subject to the COBRA continuation provisions under Federal Law.   This “General Notice” is actually two different notices – one is referred to as the “full version” and one is referred to as the “abbreviated version”.  The “full version” must be sent to ALL qualified beneficiaries (not just covered employees) who experienced, or will experience, a qualifying event at any time from February 17, 2009 through December 31, 2009.   The “full version” notice is to be used instead of the general COBRA qualifying event notice throughout the remainder of 2009.  The “abbreviated version” of the General Notice is to be provided to those individuals who have elected COBRA and are still covered after experiencing a qualifying event at some time on or after September 1, 2008.  This notice permits such individuals to elect the premium subsidy provided under ARRA.

The “Notice in Connection with Extended Election Periods” is required to be sent by plans that are subject to COBRA continuation provisions under Federal law.  It must be provided to any eligible individual entitled to assistance (or any individual who would be entitled to assistance if a COBRA continuation coverage election were in effect) who had a qualifying event at any time from September 1, 2008 through February 16, 2009; AND either did not elect COBRA continuation coverage or who elected but subsequently discontinued COBRA.   This notice MUST be provided by April 18, 2009.

The “Alternative Notice” is required to be sent by insurers that offer group health insurance coverage that is subject to the continuation coverage requirements imposed by State law rather than those imposed by federal COBRA.   This notice must be provided to ALL qualified beneficiaries, not just covered employees, who have experienced a qualifying event at any time from September 1, 2008 to December 31, 2009, regardless of the type of qualifying event.

In order to receive COBRA premium assistance under the ARRA, a qualifying individual must complete the form attached to each of the model notices.  The form requires individuals who apply for premium assistance to make five representations: (1) they were involuntarily terminated; (2) their loss of employment occurred at some point from September 1, 2008 through December 31, 2009; (3) they have either already elected or are electing COBRA (or State) continuation coverage; (4) they are not eligible for other group health plan coverage and were not eligible at any point during the period for which they are claiming premium assistance; and (5) they are not currently eligible for Medicare and were not eligible at any point during the period for which they are claiming premium assistance.

How We Can Help

The model notices available on the DOL website are a good starting point, but most employers will need to revise the model notices to reflect the specific design and administration of the employer’s plans.   We are available to assist you with the preparation of these revised notices and to answer any questions you have about the COBRA requirements under the ARRA.

Please contact the Leech Tishman attorney with whom you regularly work or Ann C. Bertino at abertino@leechtishman.com.


[i] [1] “Involuntary termination” is a termination that is at the discretion of the employer.   Note that termination for gross misconduct will generally disqualify an employer and his/her family from COBRA coverage.  Death is not an involuntary termination of employment, but if an employee dies after an involuntary termination of employment, the employee’s beneficiaries may be entitled to the premium reduction for the remainder of the 9 month period that would otherwise be available.

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