DOI Pat Quinn Governor Andrew Boron, Director

ARRA Premium Reduction for Continuation Coverage – Model Notices for Insurers

Pursuant to the American Recovery and Reinvestment Act of 2009 (ARRA) and a related State law signed by the Governor on June 18, 2009 (P.A. 96-0013), insurers and HMOs are required to notify certain individuals about the availability of premium reductions for group continuation coverage provided for under ARRA.  For more detailed information about these laws, please see the Department’s fact sheet entitled “ Federal Stimulus – Premium Reduction for Group Continuation Coverage.”

The U.S. Department of Labor published model notices to help employers and insurers comply with ARRA’s notification requirements. The Illinois Department of Insurance modified these notices to account for features unique to Illinois continuation law.

Together, ARRA and P.A. 96-0013 require insurers and HMOs to provide notice to three distinct groups of qualified beneficiaries whose group coverage is subject only to State continuation law [215 ILCS 5/367e or 215 ILCS 125/4-9.2]:

  1. Individuals who lose group coverage due to a termination of employment or a reduction in hours below the minimum required by the group plan that occurs between June 18, 2009, and February 28, 2010. (NOTE: Pursuant to an amendment to ARRA enacted on December 19, 2009, the eligibility period for the premium reduction was extended from December 31, 2009, to February 28, 2010. See below for more information.)

  • Insurers can use Model Notice 4a or Model Notice 4b to comply with the notice requirements applicable for this group of individuals.

  • The longer Notice 4a contains all of the information related to the premium reduction and other rights and obligations under ARRA, as well as all of the information necessary for the individual to make an election of continuation pursuant to the State continuation law.

  • Notice must be sent within 10 days of the termination of employment or the reduction in hours below the minimum required by the group plan.

  1. Individuals who lost group coverage due to a termination of employment or a reduction in hours below the minimum required by the group plan that occurred between September 1, 2008, and June 18, 2009, and who had an election of continuation coverage in effect as of June 18, 2009.

  • Insurers can use Model Notice 4b to comply with the notice requirements applicable for this group of individuals.

  • Notice must have been sent to these individuals by July 2, 2009.

  1. Individuals who lost group coverage due to an involuntary termination of employment that occurred between September 1, 2008, and June 18, 2009, and who did not have an election of continuation coverage in effect as of June 18, 2009.

  • Insurers can use Model Notice 9 to comply with the notice requirements applicable for this group of individuals.  Such notice must contain information related to the premium reduction and other rights and obligations under ARRA, as well as all of the information necessary for the individual to make an election of continuation pursuant to paragraph 9 of 215 ILCS 5/367e or of 215 ILCS 125/4-9.2.

  • Notice must have been sent to these individuals by July 18, 2009.

Insurers and HMOs may use notices that differ from the model notices provided by the Department. However, all notices must conform to all applicable requirements set forth in Section 3001 (a)(7) of Title III of Division B of the federal American Recovery and Reinvestment Act of 2009.

UPDATE:

An amendment to ARRA (the “ARRA Subsidy Extension”), enacted on December 19, 2009, extended the eligibility period for the premium reduction for an additional 2 months (from December 31, 2009 to February 28, 2010) and the maximum period of premium assistance for an additional 6 months (from 9 to 15 months). For more detailed information about this law, please see the Department’s fact sheet entitled “Federal Stimulus – Premium Reduction for Group Continuation Coverage.”

In addition to the notices described above, the ARRA Subsidy Extension imposes the following notification requirements on insurers and HMOs, with respect to group plans that are subject only to State continuation law [215 ILCS 5/367e or 215 ILCS 125/4-9.2]:

  • In the case of any individual who loses group coverage due to an involuntary termination of employment on or after October 31, 2009, or who is eligible for premium assistance at any time on or after October 31, 2009, additional notification must be provided regarding the amendments made by the ARRA Subsidy Extension.

    • For such individuals who lost group coverage due to an involuntary termination that occurred before December 19, 2009, this notification must be provided by February 17, 2010.

    • For such individuals who lose group coverage due to an involuntary termination that occurs after December 19, 2009, this notification must be provided within 10 days of the termination of employment.

  • In the case of any individual whose 9 months of premium reduction assistance expired prior to December 19, 2009, and who was receiving group continuation coverage immediately prior to such expiration, additional notification must be provided regarding the amendments made by the ARRA Subsidy Extension, including:

    • An individual’s eligibility for refunds or credits for premiums paid in excess of the subsidized premium amount; and

    • An individual’s ability to make retroactive premium payments in order to maintain group continuation coverage.

    • This notification must be provided within 60 days of the beginning of the first period of coverage for which the individual was no longer eligible for the premium reduction.

NOTE: For group plans subject to federal COBRA requirements (i.e., 20 or more employees), notification must be provided by the former employer. Employers can obtain additional information and resources from the U.S. Department of Labor’s COBRA Assistance under ARRA web page at http://www.dol.gov/ebsa/COBRA.html, or by calling 1-866-444-3272.