As you know from our prior communications, the United States Departments of Labor and Treasury and the Internal Revenue Service have previously issued guidance in connection with the temporary relief afforded to health plan participants as a result of the COVID-19 pandemic. The relief included the extension of several important COBRA-related deadlines, including the deadlines for: electing COBRA, making the initial and ongoing COBRA premium payments, notifying the plan of a qualifying event, and notifying the plan of a disability determination.

 

The guidance issued in connection with these COBRA extensions ultimately clarified that the applicable deadlines, as extended, must be determined on an individual-by-individual basis, based on the date(s) of the event(s) experienced by a particular qualified beneficiary (QB). The guidance also clarified that the COBRA-related deadlines would not be extended beyond the earlier of (a) one year from the date the individual was first eligible for relief, or (b) the end of the Outbreak Period (i.e., 60 days after the announced end of the National Emergency).

Earlier this month, the Internal Revenue Service (with the approval of the Departments of Labor and Health and Human Services) issued additional guidance to clarify how the extensions apply to (a) the election of COBRA coverage, and (b) the payment of COBRA premiums. Specifically, Notice 2021-58 clarifies that the extended period of time for an individual to elect COBRA coverage and the extended period of time for an individual to make the initial and subsequent COBRA premium payments generally run simultaneously. As such, a QB may not, for example, delay electing COBRA coverage for a period of one year and then delay making COBRA premium payments for an additional period of one year.

When applying these latest clarifications to a particular individual, it is important to keep in mind the following standard COBRA time frames:

Notice 2021-58 calls attention to the following rules that emerge from the COBRA-related relief provisions with respect to the payment of COBRA premiums during the Outbreak Period:

1. If a QB elected COBRA coverage outside of the standard 60-day COBRA election timeframe (meaning the individual took advantage of the extended deadline for making a COBRA election), the QB will generally have one year + 105 days (calculated by adding the 60-day period to elect COBRA coverage + the 45-day period to make the initial premium payment) after the date the COBRA election notice was provided to make the initial COBRA premium payment.

Example: QB has a COBRA qualifying event and receives a COBRA election notice on August 1, 2020. QB elects COBRA coverage six months later on February 1, 2021 (which is retroactive to August 1, 2020).  

2. If a QB elected COBRA coverage within the standard 60-day COBRA election timeframe (meaning the individual did not take advantage of the extended deadline for making a COBRA election), the QB will have one year + 45 days after the date of the COBRA election to make the initial COBRA premium payment. 

Example: QB has a COBRA qualifying event and receives a COBRA election notice on October 1, 2020. QB promptly elects COBRA coverage on October 15, 2020 (which is retroactive to October 1, 2020).  

3. A QB who delays electing COBRA may not receive an extension that lasts longer than a total period of one year for (both) the election of COBRA coverage and the payment of the initial COBRA premium. However, these timeframes may be subject to the transition relief described below.

Finally, Notice 2021-58 recognizes that some individuals may have believed that the one-year extension for making the initial COBRA premium payment begins on the date of the COBRA election, and may now have less time than they anticipated (after delaying their COBRA elections) to make the initial COBRA premium payment. As such, Notice 2021-58 includes transition relief, which provides that a QB will not be required to make the initial COBRA premium payment before November 1, 2021 (even if November 1, 2021 is more than one year + 105 days after the date the COBRA election notice was received), as long as the QB makes the initial COBRA premium payment within one year + 45 days after the date of the COBRA election.

Example: QB has a COBRA qualifying event and receives a COBRA election notice on April 1, 2020. QB elects COBRA coverage six months later on October 1, 2020 (which is retroactive to April 1, 2020). As of July 15, 2021, QB has not made the initial COBRA premium payment. 

Notwithstanding the availability of the COBRA deadline extensions provided under the COVID relief guidance, we have encouraged QBs, throughout the pandemic, to make timely COBRA elections and premium payments (in accordance with COBRA’s standard provisions) in order to prevent delays in claims processing and to avoid the potential hardship of paying multiple months’ premiums at one time. Although we have not seen many QBs make retroactive COBRA elections, employers should be aware that such QBs may be entitled to COBRA coverage, under the transition relief provisions described above, if they make (or have made) the applicable initial COBRA premium payment by November 1, 2021.

To see all of our collected information about extensions and other changes due to COVID-19, visit our Common Employer and Broker Partner Questions Related to COVID-19 page, and for information specifically about the recently-ended COBRA subsidy, visit our ARP COBRA Subsidy Information for Partners page. As always, if you need assistance, we are here to help!  

Want more information on the COBRA administration process? Check out our new Quick Guide!