On April 27, 2010, the Department of Labor released new model COBRA forms to comply with the Continuing Extension Act of 2010 ("CEA") which amended the American Recovery and Reinvestment Act of 2009 ("ARRA") by extending the COBRA premium subsidy program to cover involuntary terminations through May 31, 2010. Employers must update their COBRA election forms to advise individuals of their rights under the new law. For more information on the CEA, please see our previous client alert entitled, "Congress Extends COBRA Premium Subsidy to Cover Involuntary Termination Through May 31, 2010."
To assist employers with this process, the Department of Labor has now issued/updated five model notices. The type of notice required depends upon the particular circumstances of the qualified beneficiary. The model notices are:
1. Model Updated General Notice: To be used with all qualified beneficiaries (not just covered employees) who experienced a qualifying event at any time between September 1, 2008 through May 31, 2010 (regardless of the type of qualifying event) and who have not yet been provided a COBRA election notice.
2. Model Notice of New Election: To be used for employees who previously received a COBRA election form due to a qualifying event that was a reduction in hours at any time between September 1, 2008 through May 31, 2010, but who were later terminated from employment at any time between March 2, 2010 and May 31, 2010, and who either did not elect continuation coverage when it was first offered due to the reduction in hours, or elected COBRA coverage but later discontinued the coverage at that time.
3. Model Supplemental Information Notice: To be sent to individuals who elected and maintained continuation coverage based upon the following qualifying events:
- A termination of employment that occurred between March 1, 2010 through April 14, 2010, for which notice of the availability of the premium reduction available under ARRA was not given; or
- A reduction of the employee's hours that triggered COBRA and occurred between September 1, 2008 through May 31, 2010, followed by a termination of the employee's employment that occurred on or after March 2, 2010 and by May 31, 2010.
- Note that this is for employees who fit these descriptions and who remain on COBRA continuation coverage. The intent is to make sure that they are fully advised of their rights under ARRA.
4. Model Notice of Extended Election: To be used for individuals who experienced a termination of employment between April 1, 2010 through April 14, 2010, but who were not provided notice that informed them of their rights under ARRA, as amended by CEA, and who either chose not to elect COBRA continuation coverage at that time, or elected COBRA but subsequently discontinued that coverage.
5. Model Updated Alternative Notice: To be used by individuals seeking to comply with an applicable state continuation coverage law. This notice should be modified to also reflect the requirements of any applicable state law.
- Identify individuals that must receive a revised notice
- Prepare modified COBRA election forms
- Send required notices to such individuals