The Department of Labor (DOL) has now made available the model notices for the new COBRA requirements that may reduce affected employees’ COBRA payments under the American Recovery and Reinvestment Act of 2009 (ARRA). In addition to the model notices, the DOL has provided new Frequently Asked Questions (FAQ) guidance. These notices and the FAQs can be accessed at www.dol.gov/COBRA.
Employers are required to send the notifications to all COBRA qualified beneficiaries who have experienced a qualifying event since September 1, 2008, even if those beneficiaries will not qualify for the reduced COBRA payments. Remember that an “assistance eligible individual” under the continuation provisions can include the employee and members of his/her family. The four model notices from the DOL address the notification requirements for each affected beneficiary based on the circumstances relative to that person. In addition to providing specific information relative to the employee, the model notifications require information particular to the employer or plan, so the information must be tailored accordingly.
Also remember that while the COBRA continuation notification must be mailed to beneficiaries affected by the employee’s involuntary termination since September 1, 2008, the actual premium reduction applies to periods of coverage on or after February 17, 2009. A period of coverage is a month or short period for which a COBRA premium is charged. For plans that charge for COBRA coverage on a monthly basis, the premium reduction/subsidy starts on March 1, 2009. That premium reduction ends after 9 months of the reduction, or when the individual becomes eligible (they don’t have to have coverage yet) for other group coverage or Medicare. The individual is required to notify their plans if becoming eligible for such coverage.
In providing the model notifications, the DOL did not yet add clarification to the “involuntarily terminated” term requirement for eligibility for the subsidy. The DOL has indicated that it will soon provide guidance for that eligibility factor. However, the DOL has provided some explanation of the appeal process available for a person who is denied the subsidy and will soon be issuing appeal forms.
Employers with Less Than 20 Employees
The DOL also provides an “Alternative Notice” for employers who may be covered by a state mandate to continue health insurance, such as in Oregon. This alternative notice has several portions that must be modified to fit the Oregon requirements; however, the DOL indicates that the responsibility for this notification will be the issuer of the health insurance policy. Employers covered by the Oregon continuation requirements should promptly contact their health insurance carrier to determine who will be handling the notification compliance.
Taking Action
Because the DOL has issued circumstance specific notices, it is important that employers carefully choose the notification document that meets each affected employee’s situation. Once that is done, the employer should make sure the notification is specifically completed then sent to each affected employee. It is prudent to contact the organization’s health insurance carrier or third party COBRA administrator to coordinate the notification steps and be certain that the notification requirements contain the appropriate and complete information. Also, make sure you document each step that you have taken so that even if something is in error, your good faith efforts at compliance will be evident.
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