COBRA gives employees and their families who lose their health benefits the option to continue having health coverage. Here are important deadlines that have been suspended.
Here's what you need to know:
- The IRS and DOL have released a “final rule” that extends certain deadlines for COBRA continuation coverage
- It suspends certain COBRA deadlines during the “Outbreak Period” — starting from March 1, 2020 and ending 60 days following the end of the COVID-19 national emergency
- The final rule allows qualified beneficiaries to elect COBRA continuation coverage at any time (throughout the Outbreak Period) after being notified
- Normally, beneficiaries must notify the plan administrator within 30 days of specific COBRA qualifying events. This timeframe is suspended for the duration of the Outbreak Period
- Participants don’t have to pay the initial premium amount or subsequent payments throughout the Outbreak Period. They can choose to wait until the period ends to make the payments
- There are additional deadlines that are suspended; check the final rule for more details
The coronavirus pandemic has triggered numerous employment law changes since being declared a national emergency. One notable development is a final rule — published May 4, 2020, by the IRS and the Department of Labor — that extends certain deadlines for the Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage.
General COBRA requirement
COBRA requires private sector employers with 20 or more employees and a group health plan to offer temporary continuing health coverage to qualified beneficiaries who might otherwise lose coverage because of qualifying events — such as job loss, divorce, or reduction in work hours.
A qualified beneficiary can be:
- A covered employee
- Their spouse
- Former spouses
- Dependent children
What the final rule means for COBRA
The final rule suspends certain COBRA deadlines — starting from March 1, 2020, and ending 60 days following the end of the COVID-19 national emergency. This suspension period is, according to the final rule, “the Outbreak Period.”
Under the final rule, the following COBRA deadlines are suspended throughout the Outbreak Period.
The final rule suspends certain COBRA deadlines — starting from March 1, 2020 and ending 60 days following the end of the COVID-19 national emergency. This suspension period is, according to the final rule, “the Outbreak Period.”
Deadline to distribute COBRA election notices
Normally, employers must notify their group health plan administrator of the COBRA qualifying event within 30 days of when the event took place. The plan administrator then has 14 days to notify the participant of their right to elect COBRA continuation coverage. In cases where the employer serves as both plan sponsor and plan administrator, they have the full 44 days to issue the COBRA election notice.
Pursuant to the final rule, plan administrators do not have to distribute COBRA election notices during the Outbreak Period. But they must provide COBRA continuation coverage to eligible participants who elect it.
Note that the DOL recently updated their model COBRA notices, which can be used to inform employees about COBRA and their right to elect continuing coverage. Keep in mind, though, that the updated notices do not address the final rule’s extension.
Deadline to elect COBRA continuation coverage
Normally, qualified beneficiaries have 60 days —from when they received a COBRA election notice via their plan administrator — to elect COBRA continuation coverage.
The final rule allows qualified beneficiaries to elect COBRA continuation coverage at any time (throughout the Outbreak Period) after being notified.
Deadline to notify plan administrator of COBRA qualifying event
Normally, qualified beneficiaries must notify the plan administrator within 30 days of specific COBRA qualifying events, such as:
- Legal separation
- Loss of a child’s dependent status under the plan
The final rule suspends this timeframe for the duration of the Outbreak Period.
Deadline for participants to make COBRA payments
Normally, plan participants must pay their first COBRA premium within 45 days of electing COBRA continuation coverage. Thereafter, plan participants must make monthly payments within 30 days of when the coverage month starts.
Under the final rule, participants do not have to pay the initial premium amount or subsequent monthly payments throughout the Outbreak Period. But they are still responsible for amounts they owe during that time. They can pay the premiums as normally required, or they can wait until the Outbreak Period ends to make the payments.
Under the final rule, participants do not have to pay the initial premium amount or subsequent monthly payments throughout the Outbreak Period. But they are still responsible for amounts they owe during that time.
Additionally, the final rule extends:
- The deadline for participants to request the Health Insurance Portability and Accountability Act special enrollment in the group health plan. Normally, participants must make the request within 30 days, or if applicable 60 days, of the qualifying event.
- The deadline for participants to appeal an adverse benefits determination or file a benefits claim against the plan. Normally, there’s a 180-day deadline to appeal adverse benefits determinations under group health plans and a 60-day deadline to appeal adverse determinations under other welfare benefit plans. The terms under which participants can file a benefits claim against the plan are usually in the plan document.
- The deadline by which claimants can request an external review of an adverse or final benefits determination, such as denial of group health coverage. Normally, claimants have 4 months following the determination date to request an external review.
These 3 deadlines are suspended until the end of the Outbreak Period.
Gains are plenty, but challenges await
Despite the significant upsides of the final rule, employers face potential administrative challenges. The final rule also does not provide answers to certain questions employers may have.
- Should employers inform participants they will not lose their COBRA continuation coverage due to nonpayment during the Outbreak Period and that they have extra time to pay?
- Should employers adjust their model COBRA notices to reflect any adopted final rule changes?
- Qualified beneficiaries now have a longer window for notifying their plan administrator about a qualifying event. Depending on the situation, the employer might have to provide retroactive COBRA continuation coverage.
- If the employer typically issues COBRA election notices but don’t have a requirement to do so during the Outbreak Period, they may need to decide whether to keep sending notices as usual, or whether to stop and then restart when the Outbreak Period ends.
If you have a Third Party Administrator for your group health plan (many small businesses do), you can alleviate some of the final rule’s administrative burdens.
Your employees may have questions, too. They may, for example, wonder how they will obtain health insurance if they lose their group health coverage because of COVID-19. Consider directing them to the DOL’s “COVID-19 FAQs for Participants and Beneficiaries,” which supplies answers to questions employees might have about COBRA and the pandemic.