COBRA Extension Update
March 5, 2021
Scott Lyon, SBAM Senior Vice President
Update: On March 11, 2021 President Biden signed the American Rescue Plan Act (ARPA). It contains many HR and benefit-related items. Read more in this article.
Previously we have communicated that several extensions were in place for COBRA because of the COVID pandemic. Last year, the Departments of Labor and Treasury/IRS provided extensions for deadlines related to COBRA, HIPAA Special Enrollment Periods and claims and appeal procedures for health plans (including FSAs and HRAs). The relief provided a “pause” for counting the days allowed to make decisions related to notices, enrollment, initial payments, and ongoing payments into COBRA therefore giving participants and employers more time.
This past week, the DOL has released updated guidance that the paused timelines (called the “Outbreak Period”) now run on an individual-by-individual COBRA beneficiary basis and on an event-by-event basis. The result is that the timelines and deadlines are now different for each COBRA event and beneficiary. By DOL Rule: Every individual gets an extension to take COBRA related actions based on when their COBRA enrollment and payment; HIPAA Special Enrollment Period; or claims and appeal deadline occurred. In other words, for each event the specific deadline will end on the earlier of:
· One year after the deadline would have occurred but-for last year’s “pause”; or
· 60 days after the national emergency declared for the COVID-19 pandemic ends, whenever that will be as it was recently extended by President Biden.
Putting this in practice: For COBRA these extensions apply to the following:
· The employer’s COBRA qualifying event notice (SBAM will continue to send these out with additional language letting the Qualified Beneficiary (QB) know of the extensions) · The 60-day COBRA election period · The 45-day period to pay the initial COBRA premiums (once COBRA is elected);
· The 30-day grace period for a COBRA qualified beneficiary to make monthly premium payments;
· The date for individuals to notify the plan of COBRA qualifying events (such as divorce or disability);
Like the prior guidance, the Outbreak Period is disregarded. This means the clock is “paused” to take these actions until the earlier of either one year has passed from the original “un-paused” deadline or until the Outbreak Period is over.
We know this is difficult to wrap your mind around and fortunately, when your client is a customer of SBAM’s COBRA Administration, we have your back. Our software tracks the new timelines, premium due dates, etc. Given that, here is an example that might help explain what everyone is up against with the pausing of the timelines:
Your employee experienced a COBRA qualifying event on May 30, 2020. We sent the qualifying event notice, but the employee did not elect COBRA by the “un-paused” due date of July 29, 2020. For this example, assume that President Biden does not end the national emergency period until December 31,2021.
The employee’s extended deadline to elect COBRA coverage will end on July 29, 2021. The employee would then have another 45 more days to pay all retroactive COBRA premiums back to the day coverage was lost. If the President ends the national emergency prior to May 30, 2021, then the deadline would become 60 days after the date the national emergency was ended. For example, the national emergency ends on March 31, 2021, then the employee would have until May 30, 2021 to make a COBRA election.
Additionally, a communication may be required if the plan administrator/employer knows, or should reasonably know, that the end of the extended deadline creates a risk that the person will lose out on COBRA benefits, rights, or protections under the plan.
Okay, now what?
Overall, this is not good news for employers or administrators of COBRA. This is in many ways the worst case scenario. This new guidance makes the administrative concerns more pronounced since employers and their administrators will now have to track dates and deadlines on an event-by-event basis.
For next steps: SBAM COBRA Administration is currently developing a communication plan to alert our customers that we will be:
· Issuing a notice to employers and COBRA beneficiaries informing them of the extension of the COBRA deadlines and what it means to them.
· Reminding employers to notify active employees of their HIPAA Special Enrollment Periods around the birth or adoption of a child, a marriage, or divorce, or other covered changes to allow mid-year enrollment changes. This will avoid a large potential bill for retroactive premiums in the case of such an event.
· When the national disaster is finally declared over, a (hopefully final) notice about the end of the Outbreak Period.
For more information on the HIPPA Special Enrollment Period, claims and appeal process for health plans, FSA and HRAs please read this article from our administrative partner Kushner and company.