Employers Should Ensure COBRA Notices Are Compliant With New Legislation
The American Recovery and Reinvestment Act of 2009 (ARRA), which provides premium reductions for health benefits under COBRA, was recently amended by the Department of Defense Appropriations Act, 2010 (2010 DOD Act). Under this new legislation, those involuntarily terminated through February 28, 2010, a change from the prior cut-off of December 31, 2009, are entitled to COBRA continuation assistance. Furthermore, the legislation extended the length of that assistance to 15 months from 9 months.
The extension is retroactive for those who lost COBRA coverage because they stopped paying the premiums due to the expiration of their subsidy. By way of example, someone who was laid off and began receiving their subsidy in March 1, 2009 was subsidy eligible through November 30, 2009. If that individual did not pay his or her December 2009 premium because the subsidy expired, that person will have an opportunity to pay the lower amount to receive retroactive continuation coverage until May 31, 2010. To obtain this retroactive extension, that individual must pay their share (35%) of the past premium cost by the later of February 17, 2010 or 30 days after the required notice is given by the plan administrator. Any individuals who retained COBRA coverage after exhausting the subsidy must either be reimbursed or credited for the COBRA subsidy amounts that they would have been entitled to.
Plan administrators must be sure to update election notices to ensure they provide updated premium reduction information. Furthermore, the new legislation mandates that individuals who have already been provided a COBRA election notice without the updated information must be notified of the changes in the following manner:
- All previously eligible individuals must be notified by February 17, 2010.
- Individuals that have been involuntarily terminated on or after October 31, 2009 and lost health coverage must be notified within normal timeframes.
- Individuals whose 9-month subsidy period ended before December 19, 2009, and are now eligible for the subsidy period extension must be notified within 60 days after the date on which the 9-month subsidy period ended.
