Last week, the U.S. government issued a rule extending the required timeframes for electing and paying for COBRA continuation coverage due to the COVID-19 pandemic. Our summary of the rule can be accessed by clicking here.
These new rules apply to employers that follow Federal COBRA and do not apply to employers who follow State Continuation (aka mini-COBRA).
Under the new rule, the time period between March 1, 2020 and 60-days after the COVID-19 National Emergency is declared over is completely disregarded in calculating an individual’s COBRA election period and a COBRA premium payment due date. It’s as if the time between March 1, 2020 and 60-days after the end of the COVID-19 National Emergency never existed. Since the National Emergency declaration is still in place, the exact dates for continuants’ COBRA premium payments and COBRA elections is not known at this time, but employers should advise individuals of their extended period to elect and pay.
The following examples from the new rule provide direction on administering the extended timeframes. The examples assume that the National Emergency ended April 30, 2020 (which it didn’t) so the Outbreak Period in the examples ends June 29, 2020 (60 days after the end of the National Emergency).
Example - Electing COBRA
- 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?
- Conclusion. In Example 1, 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 - COBRA premium payments
- 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)?
- 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.