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Labor Posts COBRA Notices

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The Employee Benefits Security Administration has released model notices that can help employers and their benefits advisors comply with the new American Recovery and Reinvestment Act.

Employers can use notices based on the models to implement the health benefits continuation provisions of ARRA.

The provisions require employers that offer group health coverage and are subject to the Consolidated Omnibus Budget Reconciliation Act health coverage continuation requirements to help the federal government offer subsidized continuation benefits to laid-off workers.

In the past, workers accepting COBRA benefits had to pay 102% of the cost.

Now, the government will pay 65% of the cost and workers must pay 35%. Employers do not have to pay for the coverage, but they cannot pay for their help with administering the subsidy.

Employers also are supposed to offer the subsidized coverage to additional laid-off workers who qualify for continuation benefits under state laws that resemble COBRA, officials say.

Employer-sponsored health plans are supposed to offer the subsidized coverage to newly laid-off employees to try to track down and offer the subsidized coverage to all other eligible former employees terminated since Sept. 1, 2008.

The notices now posted on the Web site of EBSA, an arm of the U.S. Labor Department, include a general notice and a short version of the general notice.

The full version includes information on the premium reduction as well as information required in a COBRA election notion, EBSA officials write in an explanation of the model.

The short version “includes the same information as the full version regarding the availability of the premium reduction and other rights under ARRA, but does not include the COBRA coverage election information,” officials write. “It may be sent in lieu of the full version to individuals who experienced a qualifying event during on or after [Sept.] 1, 2008, have already elected COBRA coverage, and still have it.”

A third model notice, an alternative notice model, is designed for use by plans that must offer continuation benefits to individuals who are eligible for the benefits thanks to a state benefits continuation law.

A fourth notice model is designed to notify eligible individuals laid off between Sept. 1, 2008, and Feb. 16, 2009, who already have turned down or discontinued COBRA coverage that they still have the right to sign up for the subsidized COBRA continuation benefits.

The model notices are available here.

In related news, EBSA has released new answers to questions about health coverage continuation benefits.

“I was laid off from my job in December,” one consumer asks. “Is that an involuntary termination of employment?”

“Being told not to come back to work until further notice is a termination of employment for purposes of COBRA and the ARRA premium reduction provisions,” EBSA officials write.

Another consumer writes about being terminated by an employer that shut down and laid off all of its workers.

“Can I get the premium reduction to pay for new health coverage?” that consumer asks.

“The premium reduction is available to help qualified individuals pay for COBRA continuation health coverage,” EBSA officials write. “If there is no longer a health plan, there is often no COBRA coverage available, unless another related or successor employer sponsors a group health plan responsible for providing continuation coverage to you.”

The benefits continuation questions and answers are available here.


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