COBRA deadlines delayed due to COVID-19 outbreak
Posted May 6, 2020
Under COBRA, employees who would otherwise lose coverage under their employer’s group health plan, may choose to remain on the plan for a certain period. With the many furloughs and layoffs due to the economic impact of the COVID-19 outbreak, many employees may want to take advantage of COBRA to maintain health care coverage but may find meeting the deadlines challenging. Therefore, the deadlines are delayed.
Generally, a COBRA qualified beneficiary has at least 60 days to elect COBRA. Plans may not require premium payments before 45 days after the day of initial COBRA election. On May 4, the DOL and the IRS extended related deadlines until 60 days after the national emergency ends. This is referred to as the “outbreak period.”
For employees who receive a COBRA election notice on or after March 1, 2020 (the beginning of the national emergency), the 60-day initial COBRA election period will not begin until the end of the national emergency. The employee subsequently has another 45 days to make the COBRA premium payments.
If, for example, the national emergency period is proclaimed to end on June 1, 2020, the outbreak period would end on August 1, 2020. If Joe Employee was provided a COBRA election notice on April 1, 2020, his initial COBRA election deadline is extended from the original deadline of June 1, 2020 — 60 days from date of receipt of COBRA election notice — to September 29, 2020 — 60 days from the end of the outbreak period. Joe then has 45 more days to make the first COBRA premium payment. These payments apply retroactively to the date coverage was lost.
If Joe Employee previously elected COBRA and has been paying monthly COBRA premiums since March 1, 2020, he would not need to pay COBRA premiums for April, May, June, or July. Joe has until 30 days after the end of the outbreak period to pay all prior months of COBRA premiums. Using the previous example, Joe would have until August 30. The plan and insurance carrier end up holding all claims submitted during the extension period to know whether coverage will or won’t be paid.
Special enrollment periods are also extended until after the outbreak period.
While the extension allows employers extra time to provide the COBRA notices, the agencies did not specifically address how the extension applies. Employers may want to continue meeting the original notice deadlines, unless unfeasible.
Some employees and dependents may want to consider and compare health coverage alternatives to COBRA continuation coverage, such as coverage that is available through the Health Insurance Marketplace (Marketplace). Employees may be eligible for a premium tax credit (a tax credit to help pay for some or all of the cost of coverage in plans offered through the Marketplace) and cost-sharing reductions (amounts that lower out-of-pocket costs for deductibles, coinsurance, and copayments), and may find that Marketplace coverage is more affordable than COBRA.
This article was written by Darlene Clabault of J. J. Keller & Associates, Inc.