The United States Department of Labor has issued four model notices for employers and plan sponsors to use in conjunction with administering this new subsidy. The model notices are available at the DOL website at http://www.dol.gov/ebsa/COBRAmodelnotice.html. Each notice must be specifically tailored and customized to provide accurate information for the employer or plan issuing the notice.

General Notice (full version)

This notice must be sent to all employees and qualified beneficiaries who experienced a qualifying event on or after September 1, 2008, through December 31, 2008, regardless of the basis for the event. This is essentially the “new” general COBRA notice to be distributed to plan participants at the time of a qualifying event. It is captioned as being for individuals who have not yet received an election notice. However, the instructions from the DOL appear to make it clear that this notice should be distributed to everyone even if they have already received a notice.

It includes a COBRA election form for the participant to complete, as well as an optional form for switching COBRA benefit options if the plan permits assistance eligible individuals to elect to enroll in different coverage. The participant must also complete and submit a “Request for Treatment as an Assistance Eligible Individual” to be used by the employer to determine if the participant will receive the subsidy. The employer will then be required to notify the individual of their eligibility for the subsidy. Finally, it includes a model form for participants to notify employers or plan administrators that they are eligible for other coverage to lose the subsidy.

General Notice: (abbreviated version)

This notice is sent to those who had a qualifying event on or after September 1, 2008, but who have already elected COBRA coverage. If a person is already elected COBRA, they would get this notice instead of the full general notice. It is not limited to those who were involuntarily terminated. It does not include the election form (since an election has already been made) but does include the Request for Treatment as an Assistance Eligible Individual and the form to notify the employer of other coverage.

Alternative Notice

This form mirrors the full version of the General Notice, but applies to those individuals eligible for state continuation coverage (“mini-COBRA”) that generally applies to employers with fewer than 20 employees.

Notice in Connection with Extended Election Periods

As an alternative to the General Notice, if you have participants where the employers knows specifically that the qualifying event was an involuntary termination, those individuals are entitled to take advantage of the special extended election period. If they were COBRA eligible and did not elect (or did elect and subsequently terminated COBRA coverage before February 16, 2009), they are entitled to receive notice of the special election period. It contains the same form requirements as the full General Notice, but provide an explanation of the special enrollment extension.

Recommended Steps for Compliance

In preparing for the April 17, 2009, mailing deadline, we recommend employers take the following steps (including employers who are subject to state continuation obligations because they have fewer than 20 employees):

1. Identify, including names and addresses, all individuals who were COBRA eligible on or after September 1, 2008, regardless of the qualifying event, regardless of whether they elected coverage.

2. Separate from this list all participants who actually elected coverage.

3. Separate from the first list all participants whose qualifying event was an involuntary termination who did not elect COBRA coverage or who did elect and terminated that coverage before February 16, 2009.

4. Decide whether the plan will allow switching COBRA Coverage Benefit Options.

5. Determine how the employer will handle subsidy payments for the periods between February 17, 2009, and the first election period after April 17, 2009. The employer can reimburse participants for the 65% subsidy, or they can credit against future premium payments.

6. Customize each of the applicable notices for your plan and prepare for mailing to participants before April 17, 2009.