Important COVID-19-Related COBRA Relief Guidance

May 8, 2020

COBRA deadlines have been extended during the COVID-19 pandemic pursuant to a joint notice (the “Joint Notice”) issued by the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor (DOL) and the Internal Revenue Service (IRS) on May 4, 2020. [85 FR 26351]. {The Department of Health and Human Services (HHS) has reviewed and concurred with the guidance.} (EBSA and IRS are referred to herein collectively as the “Agencies”). The guidance set forth in the Joint Notice, which was promulgated as a final rule, is intended to apply from the beginning of the national emergency declared by the President, until 60 days after the announcement of the end of the COVID-19 National Emergency or such other date announced by the DOL in a future notice (the “Outlook Period”). To the extent there are different Outbreak Period end dates for different parts of the country, the DOL will issue additional guidance regarding the application of the relief to those different areas.

Relief for Employees and Employers

Under the Joint Notice, there is COBRA-compliance relief offered to both employers and employees. As for employees and other COBRA qualified beneficiaries, the plan administrator must disregard the period from March 1, 2020 until sixty (60) days after the announced end of the COVID-19 National Emergency or such other date announced by the Agencies in a future notification for all plan participants and other qualified beneficiaries, wherever located in determining the following periods and dates: (1) the 60-day election period for electing COBRA continuation coverage; (2) the date for making COBRA premium payments; and (3) the date for COBRA-eligible individuals to notify the plan of a qualifying event or determination of disability.

Accordingly, pursuant to the Joint Notice, for purposes of COBRA during the Outbreak Period, the term “election period” means “the period which—(A) begins not later than the date on which coverage terminates under the plan by reason of a qualifying event, (B) is of at least 60 days’ duration, and (C) ends not earlier than 60 days after the later of—(i) the date described in subparagraph (A), or (ii) in the case of any qualified beneficiary who receives the plan administrator’s notice of COBRA rights, the date of such notice.” Under this provision, the group health plan must treat the COBRA premium payments as timely paid if paid in accordance with the periods and dates set forth in the Notice.

With respect to group health plans, and their sponsors and plan administrators, under the Joint Notice, the Outbreak Period is to be disregarded when determining the required statutory date for providing a COBRA rights election notice to employees and qualified beneficiaries, as applicable.

Good Faith Effort Requirement

It should also be noted that the recently released EBSA Disaster Relief Notice 2001-1 (“EBSA Notice”) extends the time for plan sponsors to furnish benefit statements, annual funding notices, and other notices and disclosures required by ERISA (other than those deadlines described above that are included in the Joint Notice) so long as they make a good faith effort to furnish the documents as soon as administratively practicable. The EBSA Notice explains that good faith includes the use of electronic alternative means of communicating with plan participants and beneficiaries who the plan fiduciary reasonably believes have effective access to electronic means of communication, including email, text messages, and continuous access websites.

Notification to Participants

Plans should consider giving  some type of notification to COBRA participants of the potential consequences of not paying the full COBRA premium at the end of the Outbreak Period (i.e., the plan will not cover claims from any month for which the premiums are not paid in full at the end of the Outbreak Period). COBRA participants must understand this consequence, as failure to pay premiums could leave some claims unpaid for reimbursement to medical providers, who may look to recoup the costs from the patient if not paid by the plan.

These extensions of deadline timeframes are designed to help individuals during these unprecedented times. However, plan sponsors, administrators, and health insurance issuers will need to closely track dates and timeframes with respect to the benefit plans. Everything is essentially being put on temporary “hold” during the time of this pandemic, except with respect to plan sponsors and fiduciaries, who may be required to comply with the original timeframes if they are able to do so or, if they cannot,  must still try to comply the best they are able acting  in good faith. 

Examples

The Joint Notice provides the following examples regarding COBRA deadlines:

Example 1 (Electing COBRA): (i) Facts. Individual A works for Employer X and participates in X’s group health plan. Due to the National Emergency, Individual A experiences a qualifying event for COBRA purposes as a result of a reduction of hours below the hours necessary to meet the group health plan’s eligibility requirements and has no other coverage. Individual A is provided a COBRA election notice on April 1, 2020. What is the deadline for A to elect COBRA? (ii) Conclusion. Individual A is eligible to elect COBRA coverage under Employer X’s plan. The Outbreak Period is disregarded for purposes of determining Individual A’s COBRA election period. The last day of Individual A’s COBRA election period is 60 days after June 29, 2020, which is August 28, 2020 Example 2 (Special enrollment period). (i) Facts. Individual B is eligible for, but previously declined participation in, her employer-sponsored group health plan. On March 31, 2020, Individual B gave birth and would like to enroll herself and the child into her employer's plan; however, open enrollment does not begin until November 15. When may Individual B exercise her special enrollment rights?

(ii) Conclusion. In Example 2, the Outbreak Period is disregarded for purposes of determining Individual B's special enrollment period. Individual B and her child qualify for special enrollment into her employer's plan as early as the date of the child's birth. Individual B may exercise her special enrollment rights for herself and her child into her employer's plan until 30 days after June 29, 2020, which is July 29, 2020, provided that she pays the premiums for any period of coverage.

Example 3 (COBRA premium payments). (i) Facts. On March 1, 2020, Individual C was receiving COBRA continuation coverage under a group health plan. More than 45 days had passed since Individual C had elected COBRA. Monthly premium payments are due by the first of the month. The plan does not permit qualified beneficiaries longer than the statutory 30-day grace period for making premium payments. Individual C made a timely February payment, but did not make the March payment or any subsequent payments during the Outbreak Period. As of July 1, Individual C has made no premium payments for March, April, May, or June. Does Individual C lose COBRA coverage, and if so for which month(s)?

(ii) Conclusion. In this Example 3, the Outbreak Period is disregarded for purposes of determining whether monthly COBRA premium installment payments are timely. Premium payments made by 30 days after June 29, 2020, which is July 29, 2020, for March, April, May, and June 2020, are timely, and Individual C is entitled to COBRA continuation coverage for these months if she timely makes payment. Under the terms of the COBRA statute, premium payments are timely if made within 30 days from the date they are first due. In calculating the 30-day period, however, the Outbreak Period is disregarded, and payments for March, April, May, and June are all deemed to be timely if they are made within 30 days after the end of the Outbreak Period. Accordingly, premium payments for four months (i.e., March, April, May, and June) are all due by July 29, 2020. Individual C is eligible to receive coverage under the terms of the plan during this interim period even though some or all of Individual C's premium payments may not be received until July 29, 2020. Since the due dates for Individual C's premiums would be postponed and Individual C's payment for premiums would be retroactive during the initial COBRA election period, Individual C's insurer or plan may not deny coverage, and may make retroactive payments for benefits and services received by the participant during this time.

Example 4 (COBRA premium payments). (i) Facts. Same facts as Example 3. By July 29, 2020, Individual C made a payment equal to two months' premiums. For how long does Individual C have COBRA continuation coverage?

(ii) Conclusion. Individual C is entitled to COBRA continuation coverage for March and April of 2020, the two months for which timely premium payments were made, and Individual C is not entitled to COBRA continuation coverage for any month after April 2020. Benefits and services provided by the group health plan (e.g., doctors' visits or filled prescriptions) that occurred on or before April 30, 2020 would be covered under the terms of the plan. The plan would not be obligated to cover benefits or services that occurred after April 2020. 

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