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Are You on Top of Your COBRA Obligations? You Better Be – $110 a Day for COBRA Violations Adds Up Fast!

Employers have long been required to provide continuation of health care coverage when an employee leaves the company under most circumstances. However, the nitty gritty on what paperwork has to be provided and when is not always on the top of the to-do list when an employment relationship begins or ends. However, it should be because the Consolidated Omnibus Budget Reconciliation Act (COBRA), a federal law, has strict time requirements and stiff penalties for non-compliance.

Employees suspended without pay may be entitled to COBRA notice.

The Comprehensive Omnibus Budget Reconciliation Act of 1986 (COBRA) – part of the Employee Retirement Income Security Act (ERISA) – imposes an obligation on a healthcare coverage plan administrator to notify any employee covered by the administrator’s plan of that employee’s right to continue health insurance coverage for up to 18 months after a "qualifying event."

New Model COBRA Notice Available

As most employers know, employers offering group health insurance and employing twenty or more employees must allow terminated employees, spouses, and beneficiaries the option to continue their coverage at the group rate under the Consolidated Omnibus Budget Reconciliation Act (COBRA).

A Snake in the Grass No More? DOL Proposes New COBRA Forms

As part of its continuing efforts to update the sleepier corners of the employee benefits world to conform to the Patient Protection and Affordable Care Act (ACA), the U.S. Department of Labor (DOL) recently proposed new regulations of the Consolidated Omnibus Budget Reconciliation Act (COBRA) that likely herald more frequent adjustments to the model notice and election forms we all know and love. While employers have been and will continue to be free to craft customized COBRA notices, the new model notices supplied by the DOL offer a helpful leg up for the drafting process. They also provide employers with a safe harbor that is deemed to capture the substantive content mandated by COBRA.

Employment Law Made Un-Scary: COBRA

Everything you need to know about COBRA in one handy post

DOL Issues Model Notices for COBRA Subsidy Extension

The Department of Labor (the “DOL”) has issued three model notices for communicating the recent extension of the Federal COBRA subsidy.

COBRA Subsidy Unlikely to be Extended Further.

The American Recovery and Reinvestment Act provided a 65% COBRA premium subsidy to eligible individuals involuntarily terminated between September 1, 2008, and December 31, 2009. Congress later extended the subsidy three times; most recently for those involuntarily terminated on or before May 31, 2010. (For information regarding the original COBRA subsidy and the previous extensions, please see our archived E*Bulletins from April 2010, March 2010, January 2010, March 2009, and February 2009.)

COBRA Subsidy Extended Again . . . and Again.

On April 15, 2010, Congress passed, and the President signed, the Continuing Extension Act of 2010. The Continuing Extension Act of 2010 extends the existing 65% COBRA premium subsidy for employees who are involuntarily terminated through May 31, 2010. The subsidy was originally provided through December 31, 2009, under the American Recovery and Reinvestment Act (“ARRA”), and was previously extended through February 28, 2010, and then March 31, 2010, via the 2010 Department of Defense Appropriations Act and the Temporary Extension Act of 2010, respectively. For information regarding the original COBRA subsidy and the previous extensions, please see our archived E*Bulletins from March 2010, January 2010, March 2009, and February 2009.

COBRA Subsidy Extended and Modified.

Newly-enacted legislation extends and expands the 65 percent federal COBRA subsidy under the American Recovery and Reinvestment Act (ARRA) in cases of involuntary termination of employment. A stopgap measure signed into law on March 2 by President Barack Obama extends the end of the eligibility period from February 28 to March 31, 2010, and makes other longer-lasting changes to the year-old subsidy arrangement. These changes include:

COBRA Subsidy Extended Again (pdf).

On March 2, 2010, the President signed the Temporary Extension Act of 2010, which, among other things, extends the 65% COBRA premium subsidy through March 31, 2010. The subsidy was originally provided through December 31, 2009, under the 2009 stimulus act (the American Recovery and Reinvestment Act or “ARRA”), and was previously extended through February 28, 2010, via the 2010 Department of Defense Appropriations Act. (For information regarding the original COBRA subsidy and the previous extension, please see our previous E*Bulletins from January 2010, March 2009, and February 2009).