Federal
COBRA Subsidy - New Model Notices Published
The DOL has published the model notices that were needed to begin implementing the subsidy provisions under the ARRA Stimulus bill. Although there are still open questions, the DOL has provided enough guidance to begin notifying your participants.
The following points were clarified by the DOL:
- You must provide notice of the subsidy to any qualified beneficiary that experiences a qualifying event after the law’s effective date. This includes all participants, not just employees that were involuntarily terminated. You must also provide notice of the subsidy to all Assistance Eligible Individuals (AEIs) that previously had a COBRA event going back to September 1, 2008.
- There are separate model notices for the three groups of participants:
- Former plan participants that had a COBRA event on or after September 1, 2008 and are not currently enrolled in COBRA
- Current COBRA participants that had a COBRA event on or after September 1, 2008
- Current plan participants that experience a COBRA event between now and December 31, 2009
Your COBRA administrator should be working to get these new notices incorporated into their current COBRA process.
- An additional election form is included in the model notices for employers that allow AEIs to elect different coverage.
- The Subsidy election form contains a section for the administrator to deny the election request. The election form must be returned to the person if you or your administrator determines that the person is not eligible for the subsidy.
As you begin to comply with the new COBRA requirements, please note that the DOL’s guidance still leaves some unanswered items, including:
- The phrase “involuntary termination” for determining eligibility for the subsidy is expected to be further defined by the IRS sometime next week.
- Whether participants that receive employer-paid COBRA as part of a severance agreement will have their nine months of subsidy count from their date of termination or from the date that they are required to pay a portion of the premium.
We
expect to receive further guidance prior to April 18, 2009.
The Insight newsletter is not intended to provide legal advice but perspective on recent regulatory issues,
trends and standards affecting employee benefits. Please consult your own legal counsel for further information on the topics discussed in this issue of Insight.
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