DOL Prepares COBRA Premium Assistance Extension Notices

My prior post covered the December 2009 extension of premium assistance for employees involuntarily terminated and extending the assistance to those employees who lost their job between December 2009 and February 2010.  One of the requirements was that Plan Administrators send notices to affected employees.  The DOL has now prepared notices and these can be found at http://www.dol.gov/ebsa/COBRAmodelnotice.html

Because Congress waited until December to extend the notice, there will be COBRA participants who lost their job more than nine months before Congress extended the assistance period to 15 months.  As the DOL explained, “In addition, individuals who had reached the end of the reduced premium period before the legislation extended it to 15 months will have an extension of their grace period to pay the reduced premium. To continue their coverage they must pay the 35 percent of premium costs by February 17, 2010, or, if later, 30 days after notice of the extension is provided by their plan administrator.”

The DOL explains that these "transition period" individuals:

• must be provided this notice within 60 days of the first day of the transition period. An individual's "transition period" is the period that begins immediately after the end of the maximum number of months (generally nine) of premium reduction available under ARRA prior to its amendment. An individual is in a transition period only if the premium reduction provisions would continue to apply due to the extension from nine to 15 months and they otherwise remain eligible for the premium reduction.

Suppose, for example, a former employee's nine month assistance expired 12/1/2009.  The notice must be sent to the former employee before the end of January 2010.  The employee would have until February 17, 2010 in which to pay the December premium.  (If the full premium was paid, the employee is entitled to a refund.)

Calculating when the COBRA premium payment is due requires some thought.  I read the extension provision as saying that any premium (for a transition period former employee) that would be due January 1, 2010, need not be made until February 17, 2010 (instead of being due January 30, 2010, as it would under the 30 day grace period).  A premium payment due February 1, 2010, must be received no later than March 2 (i.e., 30 days later).  Fortunately, the DOL interprets the December extension as extending the grace period rather than the due date.