WASHINGTON--Employers now have the model notices they need to inform former employees of COBRA premium subsidies that are available to many workers laid off since the recession began.

The Labor Department was required under the recent economic stimulus law that instituted the COBRA subsidies to develop notices that employers could use to advise beneficiaries of the subsidy and how to enroll for subsidized coverage. The notices were released March 19, as mandated by Congress.

Under the law, involuntarily terminated employees are required to pay only 35% of the COBRA premium and the federal government will pick up the remaining 65%. The subsidies are available up to nine months, until a terminated employee is eligible for coverage from a new employer or becomes eligible for Medicare.

The Labor Department has provided four model notices, each tailored to a specific situation.

For example, the so-called "full notice" would be sent to beneficiaries who lost or lose group coverage from Sept. 1, 2008, through Dec. 31, 2009. A so-called "abbreviated notice" would be for beneficiaries now receiving unsubsidized COBRA.

Another model notice applies to individuals who lost their jobs from Sept. 1, 2008, through Feb. 16, 2009--the date before the stimulus legislation was signed into law--and at the time declined COBRA. That notice, which must be provided to beneficiaries by April 18, informs them of their second chance to enroll in COBRA coverage.

The fourth notice describes the right of individuals working in states with so-called mini-COBRA laws, which apply to employers with fewer than 20 employees, to also receive COBRA subsidies.

While employers are free to develop their own notices, experts expect employers will use the model notices because of time pressures to distribute the information and that they will pass Labor Department muster.

"Employers have been very anxious to receive these notices and they will use them," said Sharon Cohen, an attorney with Watson Wyatt Worldwide in Arlington, Va.

"Employers now have a very comprehensive set of documents," said Sandy Wheeler, a director in the Washington office of PricewaterhouseCoopers L.L.P.

Aside from the model notices, the Labor Department has resolved several questions that employers and others raised about the subsidy.

Using a question-and-answer format, the Labor Department, for example, says beneficiaries can be required to pay 35% of the full COBRA premium, which includes a 2% administrative fee. Some participants had questioned whether the administrative fee was excluded in calculating their share.

"That question certainly has been answered," said Karen Frost, health and welfare outsourcing strategy leader with Hewitt Associates Inc. in Lincolnshire, Ill.

Still, the notices do not resolve all the issues employers already face in trying to comply with the law.

For example, the full general notice must be provided to anyone who had a COBRA-qualifying event since Sept. 1, 2008, including those who quit and are ineligible for the COBRA subsidy.

That could create confusion and result in employers and plan administrators having to field questions about why beneficiaries are receiving information about the subsidy, said Ms. Wheeler of PricewaterhouseCoopers.

In addition, there is some disagreement as to whether the notices require eligible beneficiaries already receiving COBRA to take an active step to receive the subsidy. Some plan administrators have been automatically enrolling qualified beneficiaries into the subsidy program, even without the beneficiaries making a positive election, which some experts say the model notices bar.

"That is the biggest news about the notices. Beneficiaries must make a positive election," said Andy Anderson, of counsel with Morgan, Lewis & Bockius L.L.P. in Chicago.

While uncertain it is explicitly mandated, others say it would be sound business practice to require beneficiaries to fill out the notice and elect the subsidy to reduce the likelihood of ineligible individuals receiving it.

For example, without the individual filling out the form, an employer might not know that a laid-off worker was entitled to receive coverage through a spouse's group health insurance plan and, thus, is ineligible for the subsidy.

"It strikes me as in the best interest of the employer to get feedback," said Ms. Cohen of Watson Wyatt.

Benefit experts say the subsidies likely will result in a surge in the percentage of beneficiaries opting for COBRA coverage. Employers in industries hardest hit by the recession likely will see the greatest enrollment surge because those employees will have the most difficulty finding jobs and alternative health insurance coverage, Hewitt Associates' health actuaries said.