On May 4, 2020, the IRS and DOL issued a joint Notice extending various timelines that apply to COBRA elections and premium payments. The extensions are retroactive back to March 1, 2020. The extensions will be effective throughout the National Emergency and will end 60 days after the announced end of COVID-19 Outbreak Period and apply to the following areas:
COBRA Elections– COBRA continuation coverage must generally be elected by a qualified beneficiary within 60 days of the date the plan administrator gives notice to the qualified beneficiary of the right to elect COBRA coverage following a qualifying event that results in the loss of health coverage. COBRA applies to major medical, dental, vision and certain other types of group health coverage.
When determining the deadline for electing coverage, the entire Outbreak Period must be ignored. Therefore, an election period, that begins or ends in the Outbreak Period, will be extended giving the qualified beneficiary additional time to elect COBRA. If the qualifying event occurs during the Outbreak Period, the deadline will be 60 days after the end of the Outbreak Period.
COBRA Premiums– Generally health plans cannot require payment of an initial COBRA premium earlier than 45 days after COBRA is elected. After the initial 45-day premium period, there is a 30-day grace period for payment of the COBRA premium each month. However as stated in the recent notice, the Outbreak Period is ignored in determining the deadline for payment of COBRA premiums, which could give participants a great deal of additional time to pay.
Nevertheless, it’s important to note that insurers are not required to pay claims during a period for which COBRA premiums have not been paid, but must advise providers that the individual is covered subject to payment of the premiums and claims must be paid once the premiums have been paid. The COBRA beneficiary would be required to pay the entire amount of his or her deferred premiums in a lump sum in order to be entitled to retroactive coverage once the Outbreak Period is over.
Employee Notice of a Qualifying Event or of Disability– Typically, covered employees or qualified beneficiaries must notify the health plan administrator within 60 days after certain qualifying events such as divorce or a dependent ceasing to qualify as a dependent, to trigger COBRA rights for the individuals who are no longer eligible to be covered. A qualified beneficiary who becomes disabled during the first 60 days of COBRA coverage can qualify for an extension of the period of COBRA coverage to up to 29 months provided that the plan administrator is given notice of disability within 60 days of the date of a social security determination of disability and before the end of the original 18 months of COBRA. For purposes of these typical deadlines, the Outbreak Period is ignored in the same manner as it is ignored for election and payment deadlines described above.
Employers also have more time to provide the notice to the COBRA eligible however, it is recommended that they follow the normal timeline to limit the length of election and payment periods as much as possible.