New Wisconsin Notice for Small Employers with Insured Health Plans

On May 15, 2009, Wisconsin enacted legislation to conform with earlier Federal law changes that provide a subsidy for health care continuation coverage for involuntarily terminated employees. The Wisconsin changes apply to small employers who sponsor an insured group health plan but who are not subject to Federal COBRA.

Under the new law, these employers must:

1. give certain individuals a second chance to elect health care continuation coverage.
2. provide those individuals notice of this second chance, by May 29, 2009.

If the employer does not provide the notice, then the insurer must provide the notice. The deadline for individuals to decide whether to accept the second chance at coverage does not start until the notice is provided.

More Information

More information on the subsidy for health care continuation coverage under the Federal American Recovery and Reinvestment Act of 2009 (ARRA) is available at our online article found here.

Wisconsin small employers with insured group health plans already were subject to most of the ARRA subsidy rules but previously were not required to offer the second chance election. More information on the second chance election and to whom notice must be provided follows.

Wisconsin Notice Requirements

2009 Wisconsin Act 11 ("Act 11") was published May 18, 2009, and effective May 19, 2009. Act 11 requires that any "state eligible individual" (defined below) who became eligible for Wisconsin continuation coverage before May 19 but does not have continuation coverage on May 19, be given a second chance to elect continuation coverage. The employer must provide a second chance notice, including information on the subsidy for continuation coverage, to such individuals by May 29, 2009. The individuals have 60 days after the notice is provided to elect continuation of coverage.

If the employer does not provide the notice, then the insurer that would be responsible for providing the continuation coverage must provide the notice. The 60 day deadline for individuals to decide whether to accept the second chance at coverage does not start until the notice is provided.

In addition, for those who become state eligible individuals after May 19, the employer must provide a different notice, providing information on the subsidy. The Office of the Commissioner of Insurance has developed two model notices.

"State Eligible Individual"

The definition of "state eligible individual" tracks the Federal definition of "assistance eligible individual" and under Act 11 means a covered employee (a person who was previously covered under an employer's group policy), or the spouse or dependent of a covered employee, to whom all of the following apply:

1. The covered employee is involuntarily terminated during the period that begins September 1, 2008, and ends on December 31, 2009, and the involuntary termination is a qualifying event for continuation coverage for the covered employee or the spouse or dependent of the covered employee; and
2. The covered employee or spouse or dependent of the covered employee is not eligible for continuation of coverage under a federal continuation provision (e.g., Federal COBRA), and becomes eligible for continuation of coverage under Wis. Stats. §632.897 during the September 1, 2008 - December 31, 2009 period.