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Department of Labor Issues Model Notices for COBRA Subsidy Extension

January, 18 2010

COBRA Subsidy Extended

Previously, we posted about the federal government's extending the COBRA subsidy that was set to expire December 31, 2009. For more information on the extension, please click here to read the previous article. Now the Department of Labor has issued model forms for use in letting employees and qualified beneficiaries know about the subsidy extension.

Explanation of Notices

The law requires employers to notify current and certain former participants and beneficiaries of their right to the COBRA subsidy. The model notice forms are available in word-processing format from the DOL’s website and below. A brief explanation of the forms follows.

The DOL has issued two separate forms to target two different groups: (1) individuals whose employment was or will be terminated at any time from September 1, 2008 through February 28, 2010 and who have not yet been provided a COBRA election notice; and (2) individuals who have already been provided a COBRA election notice that did not include information about the subsidy extension.

All individuals who have not yet been provided a COBRA election notice

Employers must provide the updated General Notice to any individual who becomes eligible for COBRA until February 28, 2010. The updated model General Notice form is available by clicking here. 

Individuals who have already been provided a COBRA election notice that did not include information about the subsidy extension

Individuals who were eligible to receive premium assistance as of October 31, 2009 and individuals who were involuntarily terminated on or after October 31, 2009, but who were provided a notice that did not include the subsidy extension information, must be provided the Premium Assistance Extension Notice. This notice must be provided no later than February 17, 2010. The model Premium Assistance Extension Notice is available by clicking here. 

The Premium Assistance Extension Notice must also be provided to individuals who are in a “transition period.” An individual is in a “transition period” for six months after the end of the nine months of COBRA subsidy that was available prior to the COBRA subsidy extension. But an individual is only in a transition period if he continues to be eligible for COBRA and, because of the extension, also continues to be eligible for the subsidy. This notice must be provided within 60 days following the first day of the transition period. For individuals who first became eligible for the subsidy on February 17, 2009, the 60 days expired on January 16, 2009. For most plans, however, the subsidy was not available until March 1, 2009. And for individuals on those plans, the 60 days ends January 30, 2010.

Employers with plan participants and beneficiaries who are affected by the subsidy extension must act quickly to notify those individuals of the subsidy extension. If you have questions about your organization's obligation to provide continuation coverage under state or federal law, please contact your employment counsel, or contact us.

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