The United States Department of Labor (DOL) has published model notices that employers may use to satisfy their COBRA premium subsidy notice obligations under the recently enacted American Recovery and Reinvestment Act of 2009 (ARRA). Under COBRA, the plan administrator of an employer‑sponsored group health plan that is subject to COBRA must notify employees, spouses, and dependent children who lose plan coverage when a COBRA-qualifying event occurs. ARRA adds additional, but temporary, notification requirements relating to the availability of a subsidy towards the cost of COBRA coverage for certain subsidy-eligible individuals.

Specifically, the DOL has issued four model notices, which will need to be customized, to assist employers in meeting the notification requirements under ARRA. The DOL's model notices replace or supplement the standard COBRA notice that plan administrators furnish upon a qualifying event. The DOL model notices include:

  • a revised standard COBRA notice

  • an abbreviated version of the revised standard COBRA notice

  • a notice regarding the subsidy for employers that are exempt from COBRA but subject to a state health care continuation law

  • a notice targeted to subsidy-eligible individuals who had a COBRA-qualifying event on or after September 1, 2008, but before enactment of ARRA

For those subsidy-eligible individuals who had a qualifying event during the period of September 1, 2008, to February 17, 2009, notice must be provided by April 18, 2009.

Employers may use the DOL model forms, but will need to be careful. The model forms include multiple parts and multiple elections. They do not address all situations and require adaptation. Because the new COBRA premium subsidy provisions are temporary (they apply only where coverage is lost due to an involuntary termination of employment during the period of September 1, 2008, through December 31, 2009), a plan administrator may prefer to use a notice that supplements its existing COBRA notice. The model forms include a supplement aimed at those who have already elected COBRA that would need to be modified for ongoing use.

Each employer should consider its notice obligations carefully against its own situation and processes to determine whether and how to use the model forms. For example, the model notices contemplate a process where employees submit an election to receive the subsidy.  Employers and plan administrators should consider whether it is sensible, administratively and otherwise, to implement an election for this purpose or to provide the COBRA premium subsidy automatically to subsidy‑eligible individuals.

Our Employee Benefits and Executive Compensation Group can assist employers and plan administrators in satisfying the COBRA and ARRA notice requirements.

Click here to access the DOL's model notices.

For more information regarding the COBRA premium subsidy, please click here to see our prior legal alert.

If you have any questions regarding this development, please contact Brian M. Pinheiro at 215.864.8511 or pinheiro@ballardspahr.com, Edward I. Leeds at 215.864.8419 or leeds@ballardspahr.com.


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