Southern California Employment Law Report : Los Angeles Employment Lawyer & Attorney : Diane Crumpacker : Crumpacker Law Group : Discrimination, Disability

On December 19, 2009, President Obama signed the Department of Defense Appropriations Act, 2010 ("DDAA") extending and expanding the COBRA premium subsidy established last year. We have previously written to you in this blog on April 3, 2009 outlining the original COBRA subsidy. On January 13, 2010, the U.S. Department of Labor ("DOL"), the agency charged with responsibility for enforcing this new law, has published a model notice which must be given to any employee who is entitled to COBRA notice. You can view the new model notice online.

The new notice which is known as the “Premium Assistance Extension Notice” provides that the following employees should be given notice: (1) any "Assistance Eligible Individuals" who have received the COBRA subsidy as of October 31, 2009; (2) any employee who was involuntarily terminated after October 31, 2009 and lost health benefits coverage, but who has not been provided with the notice of their rights to a subsidy; and (3) those in a "transition period," i.e., those whose COBRA subsidy has ended because they had exhausted the original number of months provided (typically nine),  but are entitled to continue the subsidy given that the duration of the subsidy to has been extended to15 months.  

Individuals who fall into Groups (1) or (2) generally should receive the notice by February 17, 2010, and those in Group (3) should receive the Premium Assistance Extension Notice within 60 days after their original COBRA subsidy ended. In general, employers are well advised to simply send the extension notice to anyone qualified at the earliest time possible.

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The new and highly publicized American Recovery and Reinvestment Act of 2009 (“ARRA”) imposes many new obligations on California employers. One of the most significant is the requirement that group health plans notify certain current and former plan participants about a COBRA premium subsidy required by the new law. This subsidy requires employers to fund 65% of eligible employees’ COBRA continuation premiums for up to nine months.

On March 19, 2009, the United States Department of Labor issued several model notices to cover a variety of COBRA situations impacted by the recent stimulus law. These notices include three different forms to address situations which employers may face. The forms must be modified for use with your group health plan by inserting specific information and deleting inapplicable provisions.

In general, employees who were terminated involuntarily on or after September 1, 2008 and who are not currently covered by COBRA, may have a second chance to elect COBRA. They must be notified by their former employer of their new COBRA rights and the 65% subsidy no later than April 18, 2009.

Employers should provide such notice as soon as possible because former employees have 60 days from the date the notice is provided to exercise their second chance election rights, and employers will want to start the clock ticking on this exercise.  The Department of Labor has a great job loss poster describing important information employees should know about this change in the law.

The DOL has also developed model notices for notifying current COBRA participants of the potential availability of the COBRA subsidy, and for notifying employees who are involuntarily terminated during the remainder of 2009 of their general COBRA rights as well as the potential subsidy.

The DOL model notices are available at the Department of Labor informational website.

Image: The Observatorium

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