COBRA Subsidy Model Notices Released

By Staff Report

Mar. 19, 2009

The Labor Department issued a set of model notices Thursday, March 19, that employers can use to describe federal premium subsidies available to employees who lose their jobs between September 1, 2008, and December 31, 2009.

Under economic stimulus legislation signed into law last month by President Barack Obama, involuntarily terminated employees must pay only 35 percent of the COBRA premium and the federal government will pick up the remaining 65 percent. The subsidies are available up to nine months, until a terminated employee is eligible for coverage from a new employer or from Medicare.

The law also required the Labor Department to publish model notices by March 19 that employers can send to beneficiaries advising them of the subsidy and how to enroll for the subsidized coverage.

The Labor Department has provided four model notices, each tailored to a specific situation.

For example, the so-called “full notice” would be sent to beneficiaries who lost group coverage between September 1, 2008, and December 31, 2009. A so-called “abbreviated notice” would be for beneficiaries now receiving unsubsidized COBRA.

Another model notice applies to individuals who lost their jobs between September 1, 2008, and February 16, 2009—the date before the stimulus legislation was signed into law—and declined to opt for COBRA at the time. That notice, which must be provided to beneficiaries by April 18, informs them of their new right to opt for COBRA.

The fourth notice describes the right of individuals working in states with so-called “mini-COBRA” laws, which apply to employers with fewer than 20 employees, to also receive COBRA subsidies.

Aside from the model notices, which benefits experts say many employers are likely to provide to beneficiaries, the Labor Department has resolved several questions employers have raised about the new subsidy in a question-and-answer format.

For example, the Labor Department says beneficiaries can be required to pay 35 percent of the full COBRA premium, which includes a 2 percent administrative fee.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail

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