[Federal Register Volume 75, Number 90 (Tuesday, May 11, 2010)]
[Notices]
[Pages 26276-26278]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-11101]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration


Publication of Model Notices for Health Care Continuation 
Coverage Provided Pursuant to the Consolidated Omnibus Budget 
Reconciliation Act (COBRA) and Other Health Care Continuation Coverage, 
as Required by the American Recovery and Reinvestment Act of 2009 
(ARRA), as Further Amended by the Continuing Extension Act (CEA) of 
2010, Notice

AGENCY: Employee Benefits Security Administration, Department of Labor.

ACTION: Notice of the Availability of the Model Health Care 
Continuation Coverage Notices Required by ARRA, as further amended by 
CEA.

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SUMMARY: On April 15, 2010, President Obama signed the Continuing 
Extension Act of 2010 (Pub. L. 111-157), which extended, for a third 
time, the availability of the health care continuation coverage premium 
reduction provided for COBRA and other health care continuation 
coverage as required by ARRA (Pub. L. 111-5). ARRA, as amended, 
retained the requirement that the Secretary of Labor (the Secretary), 
in consultation with the Secretaries of the Treasury and Health and 
Human Services, develop model notices. These models are for use by 
group health plans and other entities that, pursuant to ARRA, as 
amended, must provide notices of the availability of premium reductions 
and additional election periods for health care continuation coverage. 
This document announces the availability of the model health care 
continuation coverage notices required by ARRA, as further amended by 
CEA.

FOR FURTHER INFORMATION CONTACT: Kevin Horahan or Mark Connor, Office 
of Health Plan Standards and Compliance Assistance, Employee Benefits 
Security Administration, (202) 693-8335. This is not a toll-free 
number.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) 
created the health care continuation coverage provisions of Title I of 
the Employee Retirement Income Security Act of 1974 (ERISA), the 
Internal Revenue Code (Code), and the Public Health Service Act (PHS 
Act). These provisions are commonly referred to as the ``COBRA 
continuation provisions,'' and the continuation coverage that they 
mandate is commonly referred to as ``COBRA continuation coverage.'' 
Group health plans subject to the Federal COBRA continuation provisions 
are subject to ARRA's premium reduction provisions and notice 
requirements. The Federal COBRA continuation coverage provisions do not 
apply to group health plans sponsored by employers with fewer than 20 
employees. Many States require health insurance issuers that provide 
group health insurance coverage to plans not subject to the COBRA 
continuation provisions to provide comparable continuation coverage. 
Such continuation coverage provided pursuant to State law is also 
subject to ARRA's premium reduction provisions and notice requirements.

II. Description of the Model Notices

a. In General

    ARRA, as further amended, mandates the provision of certain 
notices. Each of these notices must include: a prominent description of 
the availability of the premium reduction, including any conditions on 
the entitlement; a model form to request treatment as an ``Assistance 
Eligible Individual''; \1\ the name, address, and telephone number of 
the plan administrator (and any other person with information about the 
premium reduction); a description of the obligation of individuals 
paying reduced premiums who become eligible for other coverage to 
notify the plan; and (if applicable) a description of the opportunity 
to switch coverage options.
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    \1\ In general, an ``Assistance Eligible Individual'' is an 
individual who has experienced an involuntary termination of 
employment that is a COBRA ``qualifying event'' at any time from 
September 1, 2008 through May 31, 2010 if he or she elects such 
COBRA coverage. For purposes of ARRA, certain involuntary 
terminations are considered qualifying events despite the occurrence 
of a previous qualifying event.
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    The Department of Labor (the Department) created these model 
notices to cover an array of situations in order to deal with the 
complexity of the various scenarios facing dislocated workers and their 
families. In an effort to ensure that the notices include all of the 
information required under ARRA, as amended, while minimizing the 
burden imposed on group health plans and issuers, the Department has 
created several packages. As with those models

[[Page 26277]]

previously developed by the Department, each of the new packages is 
designed for a particular group of qualified beneficiaries, and 
contains all of the information needed to satisfy the content 
requirements for ARRA's amended notice provisions. The packages include 
the following disclosures:
    <bullet> A summary of ARRA's premium reduction provisions.
    <bullet> A form to request the premium reduction.
    <bullet> A form for plans (or issuers) that permit qualified 
beneficiaries to switch coverage options to use to satisfy ARRA's 
requirement to give notice of this option.
    <bullet> A form for an individual to use to satisfy ARRA's 
requirement to notify the plan (or issuer) that the individual is 
eligible for other group health plan coverage or Medicare.
    <bullet> COBRA election forms and information, as appropriate.

b. General Notice

    Plans that are subject to the COBRA continuation provisions under 
Federal law are required to send the General Notice.\2\ It must include 
the information described above and be provided to ALL qualified 
beneficiaries, not just covered employees, who experience a qualifying 
event through May 31, 2010.\3\
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    \2\ Under ARRA, as amended, the Secretary generally is 
responsible for developing all of the model notices with the 
exception of model notices relating to Temporary Continuation 
Coverage under 5 U.S.C. 8905a, which is the responsibility of the 
Office of Personnel Management (OPM). In developing the original 
ARRA model notices, the Department was required to, and did, consult 
with the Departments of the Treasury and Health and Human Services, 
OPM, the National Association of Insurance Commissioners, and plan 
administrators and other entities responsible for providing COBRA 
continuation coverage. This set of models was again created in 
consultation with staff at the Departments of the Treasury and 
Health and Human Services.
    \3\ This notice need not be provided to the extent that a notice 
including accurate information regarding rights under ARRA has 
already been provided.
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    The Department has modified the previously updated version of this 
model notice so that it includes all of the information related to the 
premium reduction and other rights and obligations under ARRA, as 
further amended by CEA. This model also includes all of the information 
required in an election notice required pursuant to the Department's 
final COBRA notice regulations under 29 CFR 2590.606-4(b).\4\ Using 
this model to provide notice to individuals who have experienced any 
qualifying event from September 1, 2008 through May 31, 2010 will 
satisfy the Department's existing requirements for the content of the 
COBRA election notice as well as those imposed by ARRA, as amended.
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    \4\ The 60-day period for electing COBRA continuation coverage 
is measured from when a complete notice is provided. ARRA provides 
that COBRA election notices provided for qualifying events occurring 
during the effective dates of the premium reduction period are not 
complete if they fail to include information on the availability of 
the premium reduction.
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c. Alternative Notice

    Issuers that offer group health insurance coverage that is subject 
to comparable continuation coverage requirements imposed by State law 
must provide the Alternative Notice. The Alternative Notice must 
include the information described above and be provided to ALL 
qualified beneficiaries, not just covered employees, who have 
experienced a qualifying event through May 31, 2010.\5\ The Department 
has modified the previously updated version of this model notice. 
However, because continuation coverage requirements vary among States 
it should be further modified to reflect the requirements of the 
applicable State law. Issuers of group health insurance coverage 
subject to this notice requirement should feel free to use the model 
Alternative Notice, the model Notice of New Election Period, the model 
Supplemental Information Notice, the model Notice of Extended Election 
Period, or the model General Notice (as appropriate).
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    \5\ See note 3 above.
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d. Notice of New Election Period

    The Notice of New Election Period is required to be sent by plans 
that are subject to COBRA continuation provisions under Federal or 
State law. It must include the information described above and should 
be provided to ALL individuals who:
    <bullet> Experienced a qualifying event that was a reduction in 
hours at any time from September 1, 2008 through May 31, 2010;
    <bullet> Experienced a termination of employment at any point from 
March 2, 2010 through May 31, 2010; AND
    <bullet> Either did not elect COBRA continuation coverage when it 
was first offered OR who elected but subsequently discontinued COBRA.
    Generally, individuals who have experienced a qualifying event that 
consists of a reduction of hours and who, from March 2, 2010 through 
May 31, 2010, experience an involuntary termination of employment must 
be provided this notice within 60 days of the event. Pursuant to CEA, 
for the April 1, 2010 through April 14, 2010 period, the notice 
requirement attaches to any termination of employment. The Department 
strongly recommends that notice be provided to individuals who 
experienced any termination of employment because employers may be 
subject to civil penalties if it is later determined that the 
termination was involuntary and notice was not provided. The Department 
has updated its model Notice of New Election Period. Using this model 
to provide notice to these individuals satisfies the requirements of 
ARRA, as amended by CEA.

e. Supplemental Information Notice

    The Supplemental Information Notice is required to be sent by plans 
that are subject to COBRA continuation provisions under Federal or 
State law. It must include the information described above and should 
be provided to ALL individuals who elected and maintained COBRA 
continuation coverage based on the following qualifying events:
    <bullet> All qualifying events related to a termination of 
employment that occurred from March 1, 2010 through April 14, 2010 for 
which notice of the availability of the premium reduction available 
under ARRA was not given; or
    <bullet> Reductions of hours that occurred during the period from 
September 1, 2008 through May 31, 2010 which were followed by a 
termination of the employee's employment that occurred on or after 
March 2, 2010 and by May 31, 2010.

For the first item above plans must provide this notice to all 
individuals with a qualifying event related to any termination of 
employment if they have not already been provided notice of their 
rights under ARRA. This notice must be provided before the end of the 
required time period for providing a COBRA election notice. For the 
second item above, generally, individuals who experience an involuntary 
termination of employment from March 2, 2010 through May 31, 2010 after 
experiencing a qualifying event that consists of a reduction of hours 
must be provided this notice within 60 days of the termination of 
employment. However, as has been noted, CEA requires plans to provide 
notices to all individuals with qualifying events related to ANY 
termination of employment that occurred from April 1, 2010 through 
April 14, 2010. In those cases, this notice must be provided before the 
end of the required time period for providing a COBRA election 
notice.\6\

[[Page 26278]]

Because employers may be subject to civil penalties if it is later 
determined that the termination was involuntary, the Department 
strongly recommends that notice be provided to individuals who 
experienced any termination of employment. The Department has updated 
its model Supplemental Information Notice. Using this model to provide 
notice to these individuals satisfies the requirements of ARRA, as 
amended by CEA.
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    \6\ ARRA section 3001(a)(7) provides that COBRA election notices 
provided for qualifying events occurring during the effective dates 
of the premium reduction program are not complete if they fail to 
include information on the availability of the premium reduction.
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f. Notice of Extended Election Period

    The Notice of Extended Election Period is required to be sent by 
plans that are subject to COBRA continuation provisions under Federal 
or State law. It must include the information described above and be 
provided to ALL individuals who experienced a qualifying event that was 
a termination of employment from April 1, 2010 through April 14, 2010, 
were provided notice that did not inform them of their rights under 
ARRA, as amended by CEA, and either chose not to elect COBRA 
continuation coverage at that time OR elected COBRA but subsequently 
discontinued that coverage. This notice must be provided before the end 
of the required time period for providing a COBRA election notice.\7\ 
The Department has updated its model Notice of Extended Election 
Period. Using this model to provide notice to these individuals 
satisfies the requirements of ARRA, as amended by CEA.
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    \7\ See note 6 above.
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III. For Additional Information

    For additional information about ARRA's COBRA premium reduction 
provisions as amended by CEA, contact the Department's Employee 
Benefits Security Administration's Benefits Advisors at 1-866-444-3272. 
In addition, the Employee Benefits Security Administration has 
developed a dedicated COBRA Web page www.dol.gov/COBRA that will 
contain information on the program as it is developed. Subscribe to 
this page to get up-to-date fact sheets, FAQs, model notices, and 
applications.

IV. Paperwork Reduction Act Statement

    According to the Paperwork Reduction Act of 1995 (Pub. L. 104-13) 
(PRA), no persons are required to respond to a collection of 
information unless such collection displays a valid Office of 
Management and Budget (OMB) control number. The Department notes that a 
Federal agency cannot conduct or sponsor a collection of information 
unless it is approved by OMB under the PRA, and displays a currently 
valid OMB control number; further, the public is not required to 
respond to a collection of information unless it displays a currently 
valid OMB control number. See 44 U.S.C. 3507. Also, notwithstanding any 
other provisions of law, no person shall be subject to penalty for 
failing to comply with a collection of information if the collection of 
information does not display a currently valid OMB control number. See 
44 U.S.C. 3512.
    OMB has approved the Department's no-material, non-substantive 
change request for the updated notices under OMB Control Number 1210-
0123. The public reporting burden for this collection of information is 
estimated to average approximately 3 minutes per respondent, including 
time for gathering and maintaining the data needed to complete the 
required disclosure. There is also an additional $0.44 average cost per 
response for mailing costs. Interested parties are encouraged to send 
comments regarding the burden estimate or any other aspect of this 
collection of information, including suggestions for reducing this 
burden, to the U.S. Department of Labor, Office of the Chief 
Information Officer, Attention: Departmental Clearance Officer, 200 
Constitution Avenue, NW., Room N-1301, Washington, DC 20210 or e-mail 
<a href="/cdn-cgi/l/email-protection#83c7cccfdcd3d1c2dcd3d6c1cfcac0c3e7ecefade4ecf5"><span class="__cf_email__" data-cfemail="1a5e5556454a485b454a4f585653595a7e7576347d756c">[email protected]</span></a> and reference the OMB Control Number 1210-
0123.

V. Models

    The Department has decided to make the model notices available in 
modifiable, electronic form on its Web site: http://www.dol.gov/COBRA.

VI. Statutory Authority

    Authority:  29 U.S.C. 1027, 1059, 1135, 1161-1169; Sec. 3001, 
Pub. L. 111-5, 123 Stat. 115; Sec. 1010, Pub. L. 111-118, 123 Stat. 
3409; Sec. 3, Pub. L. 111-144, 124 Stat. 42; Sec. 3, Pub. L. 111-
157, 124 Stat. 1116; and Secretary of Labor's Order 6-2009, 74 FR 
21524 (May 7, 2009).

    Signed at Washington, DC, this 30th day of April 2010.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration.
[FR Doc. 2010-11101 Filed 5-10-10; 8:45 am]
BILLING CODE 4510-29-P


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