Employers must distribute notices by April 17 – Model Forms AvailableThe American Recovery and Reinvestment Act of 2009 (ARRA) contains important new changes regarding the continuation of employee health care coverage under COBRA. Most notably, employees involuntarily terminated between September 1, 2008 and December 31, 2009, may be eligible to receive a federal subsidy of 65% of the cost of the COBRA premium necessary to continue their coverage in the employers' group health plan for up to nine months. The term “involuntary termination” is not defined by the law, so it could include an employee who is discharged for poor performance or misconduct as well as one who was laid off due to lack of work. The subsidy is “phased out” for high income individuals who make $125,000 to $145,000, or families making more than $250,000 and up to $290,000. The subsidy terminates at the earlier of (a) nine months; (b) eligibility for another employer's group health plan; (c) eligibility for Medicare; (d) the end of the maximum COBRA period provided by law. Eligible individuals who were terminated after September 1, 2008 who did not elect COBRA must be provided notice of the subsidy. They have 60 days in which to elect COBRA coverage at the subsidized rate.
The Act requires employers to issue two new notices. The first notice must inform eligible individuals about the availability of the premium reduction along with the option to enroll in a lower cost plan if that option is available through the employer and the employer allows others to change plans. The second notice must (a) state that an individual who did not initially elect COBRA coverage has the 60 day special election period to elect coverage at the subsidized rate, (b) advise the individual of the availability of the subsidized rate, (c) list the requirements for the qualification, and (d) include the forms necessary to elect COBRA. The employer must distribute these notices within 60 days of the Act's enactment (BY APRIL 17, 2009).
The Department of Labor has developed model notice forms available at ...
www.dol.gov/ebsa/COBRAmodelnotice.html. Also, for a question and answer article on COBRA and ARRA prepared for employers, contact the ABC Chapter office or go to www.abcnhvt.org.