COBRA template with subsidy

[Guest Benny Guy]

Does anyone have a link to a template with the subsidy language in there? I thought the DOL was supposed to release one?

A Wonka dollar to anyone who helps...thanks.

[oriecat]

Haven't seen anything from the DOL yet. I think they have two more days...

[oriecat]

http://www.dol.gov/ebsa/COBRAmodelnotice.html

[Guest SLSHAHAN]

I keep hearing conflicting information on who needs to get the notice.

I know going forward that the new notice goes to all COBRA beneficiaries, whether they were voluntarily or involuntarily terminated, but what about those people that have the new election? Do we need to send it to everyone, or just the people that were involuntarily terminated? I am thinking just the latter, but wanted someone else's take on it.

Thanks!

Shannon

[401 Chaos]

Based on the accompanying DOL guidance, seems their recommendation is that all qualified beneficiaries incurring a qualifying event since Sept 1 2008 should receive it, not just those involuntarily terminated. That approach, while confusing to folks clearly not eligible, would permit "voluntarily terminated" individuals to appeal their classification and thus exclusion from the subsidy right. The way I read the DOL guidance, that would seem to include individuals with reduction in hours as a qualifying event as well which would seem a bit strange since there would seem to be little chance of them having been terminated if they are still working.

[Guest SLSHAHAN]

Thanks Chaos!

Some of this stuff is still as clear as mud!!!! I am attending the Webinar on Tuesday - maybe I will get some more answers then as well!

Shannon

[oriecat]

The way they set up the model notices is really confusing. They are saying to send a new notice to everyone who had a QE since 9/1/08, but then the model notice that they put out clearly says it is for people who haven't received a notice yet at all. Well most of the people from that time frame got a notice long ago.

[Guest Sieve]

My take on the model notices is that the one labelled "Notice in Connection with Extended Electin Periods" goes only to those who are not currently paying for COBRA but who are to be given the special election period--i.e., it only goes to AEIs (those eligible for the subsidy) who are not on COBRA now (but who either declined coverage earlier or let COBRA coverage lapse).

On the other hand, the notice that goes to all COBRA-eligibles is to be used for those who have not yet received a COBRA notice (i.e. those who have not yet terminated employment or those who terminated but whose COBRA notice has not yet been sent). That notice goes to any COBRA-eligible terminated employee, explains the subsidy and permits them to request it, but does not provide a special extended election because they are not eligible for it.

So, I think the additional election period notice only goes to those determined by the employer to be AEIs. A prudent approach, however, would be to send it to everyone terminated after 9/1/08 who recieved a prior COBRA notice, since the language of the model notice only tells people that they "might" be eligible for the subsidy.

But, it's only my opinion.

[Christine Roberts]

Some clarity from today's welfare plan newsletter from Benefitslink:

http://www.theworkplace.biz/COBRA_confusin...timulus_nf.html

[oriecat]

Thanks for that, Christine, that is helpful., even if it just solidifies that the issue with the general notice going to everyone is really stupid.

[oriecat]

Seems that the DOL webpage has been updated to fix some of this confusion:

http://www.dol.gov/ebsa/COBRAmodelnotice.html

General Notice (Full version) Plans subject to the Federal COBRA provisions must send the General Notice to all qualified beneficiaries, not just covered employees, who experienced a qualifying event at any time from September 1, 2008 through December 31, 2009, regardless of the type of qualifying event, AND who either have not yet been provided an election notice or who were provided an election notice on or after February 17, 2009 that did not include the additional information required by ARRA. This full version includes information on the premium reduction as well as information required in a COBRA election notice.

Someone on another forum I use said they just attended the DOL webinar and "They repeatedly said throughout the webinar that only AEIs get the notice and that you don't have to send it to everyone."

[jpod]

Oriecat: Not true. DOL made it clear in webcast that the General Notice must go to all QBs. However, the Notice of Extended Election Periods need be sent only to AEIs.

[oriecat]

Ow, my head.

So you are saying that they said that you have to send the new General Notice to every QB since 9/1, regardless of the reason, even if they don't qualify, and in contrast to the instructions on the webpage now?

[jpod]

I'm not sure what instructions you are looking at, but the instructions on the web page I see are very clear: the General Notice (either the full version or, if the individual is already enrolled in COBRA coverage) must go to every QB whose qualifying event was on/after 9/1/08. However, the Extended Election Notice goes only to AEIs.

[401 Chaos]

It's a bit of a mess, I agree, but I agree with jpod and think that is generally a logical process given the model notices.

If the employer is comfortable somebody is an AEI and second election notice applies, then it is appropriate to send that on to them since it provides actual election info. However, if there are individuals that the employer does not feel were involuntarily terminated (and thus are not AEIs), the DOL feels strongly those individuals should have the ability to "appeal" the employer's classification. Thus, those individuals need to be informed of possible rights as AEIs and their ability to request a subsidy as an AEI. If a former employee challenges / appeals and is determined to be an AEI, then they will then get the second election notice but it does not make sense to send that to somebody who is of questionable AEI-status.

I guess I am still at a loss though why employers would necessarily have to send out to participants encountering a qualifying event that does not involve a termination of employment (or death or disability). I can see where things get murky if there was a termination that may or may not have been "voluntary" but if you have just had your hours reduced I would think it hard to argue that as some sort of involuntary termination.

Sometimes I think it might have actually been less confusing if they had released yet another model general notice aimed specifically at those individuals who experienced a qualifying event on or after Sept. 1, 2008 and are not deemed to be an AEI by their employer. Of course, I think plan sponsors could prepare something of a customized notice or letter for folks in this category rather than just sending the general notice if they desired.

[oriecat]

I'm not sure what instructions you are looking at, but the instructions on the web page I see are very clear: the General Notice (either the full version or, if the individual is already enrolled in COBRA coverage) must go to every QB whose qualifying event was on/after 9/1/08. However, the Extended Election Notice goes only to AEIs.

The instructions I posted above, with the bolded AND statement.

[Guest SHaddon]

Here is what I took away from the DOL webcast as well as other sources:

The Full General Notice must go to the following individuals who experienced qualifying event that resulted in loss of coverage between 9/1/08 - 12/31/09:

A. due to an involuntary termination of employment

B. due to any qualifying event between 9/1/08 and 2/16/09 and did not already received a General Notice

C. due to any qualifying event on or after 2/17/09 and received a notice that did not contain the ARRA subsidy language

So, As are AEIs and get the second chance to elect. C may be an AEI if the event was due to an involuntary termination of employment. B may be an AEI and get the second enrollment period only if a notice was never sent to them when they were first eligible for a COBRA election.

The Abbreviated Notice would go to A & C who elected COBRA initially and either maintained it or subsequently dropped coverage

[oriecat]

Thank you, that has been my current understanding as well.

[401 Chaos]

Thanks. I'm not sure I fully follow the discussion with respect to those individuals in Category B so we may be saying some of the same things. I do agree with the general comment that individuals with a qualifying event other than involuntary termination between 9/1/08 and ARRA who received a general COBRA notice apparently need not necessarily receive any additional notice. That does seem consistent with the DOL web presentation (which I admit I haven't had a chance to listen to in its entirety but did listen to partially over the weekend).

Note the caveats discussed in the hypotheticals during the web presentation though around minute 59:00. My previous comments were aimed primarily at ensuring that those individuals who encountered a termination of employment (whether voluntary or involuntary) were given notice of the subsidy provisions and an ability to apply for the subsidy by virtue of appealing a decision of the employer that the individual's termination was voluntary and thus the individual was not an AEI and not eligible for a subsidy.

Based on the presentation discussion, it seems that an employer technically need not provide any additional notice to an individual that separated from service during the 9/1/08 - 9/16/09 if they previously received a COBRA notice, are not currently enrolled in COBRA, and the employer considers the individual to have voluntarily terminated employment. If, however, that same individual actually could or would be considered by the government to have involuntarily terminated, then the individual would be an AEI and thus would be entitled to receive an Extended Election notice. As a result, it seems there is some risk with the employer making a unilateral call on the voluntary versus involuntary nature of termination and not sending the Extended Election notice to individuals with a qualifying event tied to a separation from service. I believe the government generally feels those individuals, particularly those with constructive discharge or buy-out arguments, etc. where there is a gray area, should have the ability to challenge the employer's interpretation of a voluntary termination.

The presenter touched on this and indicated that the IRS is to come out with additional guidance on what constitutes involuntary termination that may be helpful. Otherwise, the presenter indicated it would not be unreasonable for employers to "cast a wide net" with notices (particularly the Second Election notices) and send to all qualified beneficiaries (or maybe at least all with Qualifying Events tied to terminations of employments) to be sure no potential AEI is missed. The employer and individuals could sort out individual situations / qualifications for actual subsidies on a case by case basis but the employer would be sure to have provided all Second Election notices to all potential AEI by the April 18th deadline.

As a result, it seems to me a reasonable approach may be for plans to consider sending the Second Election notice to all indivdiuals who prevously received a regular notice and had a termination of employment as a qualifying event from 9/1/08 through 2/16/09 (regardless whether the employer deems termination to have been voluntary or involuntary). I suppose in cases where it is absolutely clear that termination was voluntary this might be skipped but the less clear, the better the reason for sending. The notice could be clarified, if desired, to explain that the subsidy only applies to those who had an involuntary termination and the employer considers them to have been voluntarily / involuntarily terminated and thus eligible / ineligible. Based on the presentation and revised guidance it does seem unnecessary to be that cautious and send Second Election notices to those with qualifying events other than a termination (reduction in hours, disability, etc.).