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Employment Law Blog

Tuesday, January 19, 2010

Department of Labor Publishes COBRA Subsidy Extension Model Notices

The government has published updated model forms for the recently extended COBRA subsidy.

Congress passed legislation on December 19th extending the COBRA subsidy eligibility period and coverage period. The extension came as part of the Fiscal Year 2010 Defense Appropriations Act.

The 2010 DOD Act extends the COBRA premium reduction eligibility period for two months until February 28, 2010. This means that employees who are terminated on or before February 28, 2010 may be eligible for the subsidy.

Additionally, the legislation increases the maximum period for receiving the subsidy for an additional six months (from nine to 15 months).

The legislation also helps those who already exhausted their subsidy period under the original legislation. Individuals who had reached the end of the reduced premium period before the legislation extended it to 15 months will have additional time to pay the reduced premiums related to the extension. To continue their coverage they must pay the 35% of premium costs by 60 days after date of enactment or, if later, 30 days after notice of the extension is provided by their plan administrator.

Individuals who lost their subsidy and paid the full 100 percent premium in December 2009 should be told to contact their plan administrator or employer sponsoring the plan to discuss a credit for future months of coverage or a reimbursement of the overpayment.

In addition to the notice requirements already mandated under ARRA, the 2010 DOD Act requires employers to provide notice of the new rights.

The employer or its group health plan administrator must give notice to any individual who was already eligible for the subsidy as of October 31, 2009. The notice must be given within 60 days of enactment (i.e. by February 21, 2010). The notice must also be given within 30 days to any individual who becomes eligible for the subsidy (i.e. terminated) on or after October 31, 2009. The new notice must provide information regarding the 2010 DOD Act amendments.

The Act also requires notice to individuals who either dropped COBRA or paid the full premium for it when their nine-month subsidy ended. The notice explains that they have two options: to either reinstate their coverage retroactively at the 35% subsidized rate, or to receive a credit or refund.

The DOL has published the updated model forms on its website, which can be found at this link.

Submitted by:
Christopher W. Olmsted, Esq.
Barker Olmsted & Barnier, APLC

Posted by Christopher W. Olmsted on 01/19 at 11:21 PM
Employment Law