Changes to COBRA Notices

Spring 2009Newsletters California Update - Second Quarter 2009

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The recently signed American Recovery and Reinvestment Act of 2009 makes significant changes to COBRA. These changes have resulted in revised notifications and new financial obligations for employers. Employees who have been involuntarily terminated since September 1, 2008, may now extend their employer health coverage for up to nine months. Qualified beneficiaries will be required to pay only 35 percent of the required continuation premium, while the employer will be required to pay the remaining 65 percent, subsidized by the government. 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, which are available online at the DOL website. Each notice must be specifically customized to provide accurate information for the employer or plan issuing the notice. Most importantly, employers have only until April 18, 2009, to identify and provide the applicable notices to all eligible qualified beneficiaries under the health care plan.