It has been almost two months since Congress extended the COBRA subsidy, and many employers are still finding the new rules challenging, particularly the notification requirements. The following is a condensed summary of the changes and new notification requirements.
Background
Original Subsidy Program (Prior to December 19, 2009)
In February 2009, Congress passed a law that offered a COBRA premium reduction to employees who became COBRA eligible between September 1, 2008 and December 31, 2009. Those employees could obtain continuation of their health benefits for up to nine months by paying only 35% of their premiums.
Subsidy Extension (Beginning December 19, 2009)
On December 19, 2009, Congress amended the previous law extending the eligibility deadline from December 31, 2009 to February 28, 2010. In addition, the duration of the subsidy was extended from nine months to fifteen months.
Notification Requirements
As part of the original law, employers had to give notice of the COBRA subsidy program to employees (and their qualified beneficiaries) who were involuntarily discharged. As a result of the recent subsidy extension, the notice requirements have changed. They are as follows:
Employees Discharged Between December 19, 2009 Until February 28, 2010:
These employees must be given a “General Notice” within the normal timeframes for providing a COBRA election notice. Please contact us for a sample notice.
Employees Whose COBRA Subsidy Expired in 2009:
Employees whose nine-month subsidy under the original law expired in November must be provided with a “Premium Extension Notice” within 60 days after the end of their original nine-month subsidy period (again, we have a sample of this notice available). Assuming they meet all eligibility requirements, these employees are eligible for an additional six months of coverage at the reduced premium. Also, if they already paid the full premium for December, they may receive a refund or a credit toward future premiums.
Employees Eligible for the COBRA Subsidy as of October 31, 2009 and Employees Terminated on or After October 31, 2009
This group represents everyone who may be eligible for the extended COBRA subsidy and who hasn’t been notified of it yet. Employers must provide this group with the new “General Notice” by February 17, 2010.
Consult Counsel For Specific Issues
While the foregoing should serve as a helpful overview, the Devil (as always) is in the details. Because of the complexity of the COBRA rules, you should consult with competent counsel on compliance issues. Brody and Associates regularly advises management on complying and remaining up to date with state and federal employment laws. If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.
