Model COBRA Notices have been released by the U.S. Department of Labor (DOL). There are four Model COBRA Notices in all, which are required to effectuate the provisions of the 65% governmental subsidy of COBRA premiums enacted as part of ARRA.
The Four Model COBRA Notices
The first model COBRA Notice is the General Notice. It has been released in a full-length version, consisting of 13 pages, and an abbreviated version, totaling 9 pages in length. The abbreviated version constitutes the second model COBRA Notice.
The General Notice informs Qualified Beneficiaries (QBs) of their right to elect COBRA coverage, the cost of the coverage, and the provisions of the COBRA premium subsidy–all in a Q & A format. The full version should be used for a QB who has just incurred a qualifying event and is entitled to elect COBRA coverage.The abbreviated version is to be provided to those QBs who had a qualifying event on or after September 1, 2008, and who are currently enrolled in COBRA coverage.
The third Notice is the Notice in Connection with Extended Election Periods. This Notice is to be provided to those QBs who
- are or would be eligible for the subsidy but are not now enrolled in COBRA coverage; or
- were enrolled in COBRA coverage and subsequently discontinued coverage with regard to qualifying events that occurred on or after September 1, 2008, and on or before February 16, 2009.
The Fourth Notice is for use by insurers that provide group health-insurance coverage to persons who became eligible for continuation coverage under a state law. The DOL points out that the continuation coverage requirements vary among states, and insurers must modify this model notice as necessary to conform it to the applicable state law. All of the Notices have optional pages to be used if the employer chooses to allow the QBs to elect alternative, cheaper medical coverage.
All of the Notices include a form entitled Request for Treatment as an Assistance Eligible Individual. This form must be completed by the QBs and returned to the employer for a determination by the employer of whether the QBs are entitled to the COBRA subsidy. If the employer determines that the QB is not entitled to the subsidy, the QB can appeal that denial to the DOL.
Now that the DOL has issued the Model Notices, employers can begin notifying QBs of the availability of the COBRA premium subsidy available under ARRA.
- All QBs who had qualifying events on or after September 1, 2008, and had not elected COBRA by February 17, 2009.
- Those QBs already covered by COBRA on February 17, 2009 must be provided with the appropriate Notice no later than April 18, 2009.
The subsidy must be provided beginning with the March 2009 COBRA coverage. At this point, it doesn’t seem that employers would be able to get the appropriate notices out to the QBs and make a determination of whether they are entitled to the subsidy in time for the payment of the April COBRA premiums. Therefore, employers should get the Notices out as soon as possible so that the QBs can return the completed forms and employers can make the determinations regarding a QB’s status as an Assistance Eligible Individual in time for the payment of the May premiums. This means that the employers will be providing the Assistance Eligible Individuals with either refunds or credits for the amount of the premiums that they paid for March and April coverage that exceeded 35% of the premiums.
This post was written by Guest Blogger, Timothy J. Snyder, Esq., Chair of the Tax/Trusts & Estates and Benefits Section at Young Conaway. Tim posted earlier this month offering very helpful Guidance for Employers on the New COBRA Subsidy. Maribeth L. Minella has also provided helpful commentary on the employment-related effects Stimulus Package. Her previous posts include:
, which includes forms published by the IRS, and has been updated to include the Model Notices. The package is a PDF, best viewed with Adobe Acrobat 9. (Download Reader 9.)
Included in the package are the following:
- IRS Revised Form 941 (Employers Quarterly Federal Tax Return)
- IRS Instructions for Revised Form 941
- DOL FAQ and Fact Sheet
- DOL Flyer for Employers
- Model COBRA Notice: General Notice (full)
- Model COBRA Notice: General Notice (abbr.)
- Model COBRA Notice: Notice in Connection with Extended Election Periods
- Model COBRA Notice: Request for Treatment as an Assistance Eligible Individual