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Government Subsidy for COBRA Premiums – Part III

by Troutman Sanders LLP

This is the third in a series of Advisories we have issued on the government’s new temporary COBRA subsidy for qualified beneficiaries who lose or lost coverage due to an involuntary termination of employment between September 1, 2008 and December 31, 2009.  See our prior Advisories of February 20 and March 3 for details. 

Yesterday, the Department of Labor issued the long anticipated model COBRA notices, election forms and ancillary documents that may be used in implementing the new COBRA subsidy rules.  The packages include the following disclosures:

  • summary of the new law’s premium reduction provisions;
  • form to request the premium reduction;
  • form for plans or issuers who permit qualified beneficiaries to switch coverage options to use to satisfy the new law’s requirement to give notice of this option;
  • form for an individual to use to satisfy ARRA’s requirement to notify the plan or issuer that the individual is eligible for other group health plan coverage or Medicare; and
  • COBRA election forms and information.

Below are links to and brief descriptions of each of four sets of model forms for qualified beneficiaries after experiencing a qualifying event at some time on or after September 1, 2008:

General Notice

Long Version – is for individuals who have not yet received a COBRA notice.

Abbreviated Version – is for individuals who have received a COBRA notice, elected COBRA and are still covered.

Notice in Connection with Extended Election Periods – is for individuals who have received a COBRA notice, and either (a) elected and discontinued coverage, or (b) not elected coverage.

Alternative Notice – The alternative notice is required to be sent by issuers that offer group health insurance coverage that is subject to continuation coverage requirements imposed by state law.

Affected employers may use the model notices and election forms or customize their own forms.  Even if the model forms are used, there are decisions to be made in selecting the appropriate forms, inserting variables for each affected qualified beneficiary and reprogramming HRIS and other systems to administer the new COBRA subsidy rules.  In any case, the special notice and election forms must be finalized and issued by April 18, 2009.

If you have any questions relating to implementation of the new COBRA subsidy requirements, please contact a member of the Troutman Sanders Compensation and Employee Benefits Practice Group.