ARRA Update

  American Recovery and Reinvestment Act Update -
          COBRA Election Notices from The Department of Labor
 
The Department of Labor created model notices to help employers comply with requirements set forth by the American Recovery and Reinvestment Act (ARRA). Each model notice is designed for a particular group of qualified beneficiaries and contains information to help satisfy ARRA's notice provisions.
 
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.
 
General Notice (Abbreviated version) - The abbreviated version of the General Notice includes the same information as the full version regarding the availability of the premium reduction and other rights under ARRA, but does not include the COBRA coverage election information. It may be sent in lieu of the full version to individuals who experienced a qualifying event on or after September 1, 2008, have already elected COBRA coverage, and still have it.
 
Alternative Notice - This Notice is to be sent to persons who became eligible for continuation coverage under a State law (mini-COBRA).
 
Notice in Connection with Extended Election Periods - Plans subject to the Federal COBRA provisions must send the Notice in Connection with Extended Election Periods to any assistance eligible individual (or any individual who would be an assistance eligible individual if a COBRA continuation election were in effect) who:
  
1. Had a qualifying event at any time from September 1, 2008 through February 16, 2009; and
2. Either did not elect COBRA continuation coverage, or who elected it but subsequently discontinued COBRA. 
          
This notice includes information on ARRA's additional election opportunity, as well as premium reduction information.  This notice must be provided by April 18, 2009. 
 
 
Failure to provide the notices would be a COBRA violation and subject to the standard COBRA penalties of up to $110 a day under ERISA. Additionally, there could be adverse tax consequences under the Internal Revenue Code, which can impose excise taxes of $100 per day per notice on the plan administrator.
 
 
Important Information for Small Group Employers:
(under 20 employees)
 
A group not subject to COBRA (under 20 employees) is required under South Carolina law to offer its employees state continuation coverage.
Because the law requires the insurer to provide the subsidy for non-COBRA eligible groups, many of the insurance carriers are allowing the employer to submit only the 35% employee contribution and they will supply the additional 65% contribution. 
Each insurance carrier is handling this differently and we are awaiting further details on how the carriers will be processing these enrollments and payments. Additional information will be emailed as soon as it becomes available.   
 
 
Helpful Information form the IRS Regarding ARRA:
 
Click here for questions and answers on how to administer the COBRA continuation subsidy.

Employers should use the updated Form 941, Employer's Quarterly Federal Tax Return, to report their COBRA premium assistance payments. The Form 941 Instructions explain how to complete lines 12a and 12b, which address the COBRA premium assistance payment.