Jody Lee, Compliance Manager, Johnson & Dugan
Employers are anxious to comply with the March 1, 2009 effective date of the COBRA Subsidy that was included in the American Recovery and Reinvestment Act signed by President Obama on February 17, 2009. The deadline for the Department of Labor (DOL) to publish the model notices is right around the corner, and employers as well as Assistance Eligible Individuals (AEI) patiently await the guidance these will notices offer. Although there are still many unanswered questions, some things are clear.
Specific deadlines have been set. Here is a timeline of important dates for employers and AEI's:
| Date | Action |
|---|---|
| February 17, 2009 | American Recovery and Reinvestment Act signed into law |
| March 1, 2009 | COBRA Subsidy takes effect (pending model notice - subsidies may take effect retroactively) |
| March 19, 2009 | Deadline for the DOL to publish model notices |
| April 18, 2009 | Deadline for employers to provide notice to AEIs |
| Date of Notice + 60 days | Deadline for individuals to elect Second Chance COBRA per the special COBRA election period |
Given the above dates, employers should prepare their compliance plan:
- Identify all terminations back to 9/1/08, including individuals involuntarily terminated. The Notice should go to all employees that lost coverage, although only those involuntarily terminated are eligible for the subsidy. Individuals will have the right to apply, and their request can be denied. A claim appeal process is included in the law.
- Once the model notices have been published, notifications must be distributed.
- Companies that outsource COBRA Administration should coordinate the identification and notification process with their vendor.
- Coordinate with payroll vendor to understand the mechanics of reporting and claiming the tax credit. (This will not apply to small employers subject to CalCOBRA rules.)
Johnson & Dugan will be providing clients with the model notices when they become available. We will also continue to distribute updates that clarify compliance rules when available. Contact your Johnson & Dugan team if you have any questions.
