Effective immediately terminated workers have been given more time to elect COBRA coverage and pay premiums through a new final rule Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak released by the DOL and IRS on May 4, 2020.
The rule extends most COBRA deadlines to beyond the “Outbreak Period,” which it defines as March 1, 2020, to 60 days after the end of the declared COVID-19 national emergency, or another date if provided by the agencies in future guidance. For instance, If the emergency declaration expires as written on June 29, 2020, the Outbreak Period will end on August 28, 2020.
Note: No extension was granted for the 14-day deadline for plan administrators to furnish COBRA election notices.
We have reached out to all of the carriers so we can understand how they are going to manage this process as it may lead to some administrative challenges for everyone.
The final new rule applies as follows:
- The COBRA election period. Under COBRA, employees and dependents who lose active coverage as a result of a qualifying event, such as termination of employment or reduction of hours, normally have 60 days to elect continuation of coverage after receiving a COBRA election notice. Under the rule, the 60-day timeframe doesn’t start until the end of the Outbreak Period.
- The COBRA premium payment period. COBRA enrollees normally have 45 days from their COBRA election to make the first premium payment, and subsequent monthly payments must be made within a 30-day grace period that starts at the beginning of each coverage month. The new rule extends the initial premium payment and grace period dead lines beyond the Outbreak Period.
Example: An individual who experienced a qualifying event in April will have until 60 days after the end of the Outbreak Period within which to elect COBRA. Similarly, any COBRA premiums due during the Outbreak Period will not be considered delinquent if the COBRA premiums are paid within 30 days following the end of the Outbreak Period. This means that COBRA premium payments that are due for March, April and May, at the very least at this point, are not required to be paid until 30 days after the end of the Outbreak Period.
Unanswered Questions – Carrier Guidance To Follow
We understand this new rule creates administrative challenges and many questions that still need to be answered. As this rule is very new we are currently working with the carriers to release further guidance and will provide updates as soon as new information becomes available.