The Internal Revenue Service (IRS), Department of Labor (DOL), and other federal agencies released an update on COBRA extensions and claims filing due to the COVID-19 outbreak. This latest guidance came after Congress passed the CARES Act in late March 2020, along with other initiatives to ease the economic effect on American workers and companies.
The final notice, published April 29, 2020, recognized that “participants and beneficiaries covered by group health plans, disability or other employee welfare benefit plans, and employee pension benefit plans may encounter problems in exercising their health coverage portability and continuation coverage rights, or in filing or perfecting their benefit claims.”
Final Notice Guidelines – COBRA Extensions and Claims Filing
Group health plans, disability and other employee welfare benefit plans, and employee pension benefit plans subject to ERISA or the Code must disregard the period from March 1, 2020 until 60 days after the announced end of the National Emergency or such other date announced by the Agencies in a future notice (the “Outbreak Period”) in determining the following periods and dates.
- 60-day election period for COBRA continuation coverage;
- Date for making COBRA continuation coverage premium payments;
- Notification date for individuals to tell a health plan of a qualifying event or disability;
- Date for providing a COBRA election notice from group health plan sponsor or administrator
In the Final Notice, there is a list of scenarios that provide clarification for each situation.
Under normal conditions (non COVID-19 related), the following COBRA rules apply:
Under COBRA continuation law, once a beneficiary has a qualified event (loss of job, reduction in hours, death of covered employee, etc.), they have 60 days to choose whether or not to elect COBRA coverage.
COBRA Premium Payments
Plans are required to allow premium payments in monthly installments and cannot require a payment before 45 days after the day of initial COBRA election. Failure to pay on time can result in coverage termination for the beneficiary. However, premiums must be considered on time if they are made no later than 30 days after the first day of the period begins.
Once a beneficiary has a qualifying event, the employer must notify the plan administrator within 30 days of the event. Within 14 days of getting the employer’s notice, the COBRA administrator must send a COBRA election notice to the beneficiary
Extended Run Out Period for FSA and HRA
The run-out period for Flexible Spending Accounts (FSAs) and Health Reimbursement Arrangements (HRAs) has also been extended. Participants now have until 60 days after the “Outbreak Period” is over, or until further notice, to get reimbursed for eligible healthcare expenses.
Run-out is an extended period of time in which participants can file claims incurred during the previous plan year. Run-out periods can vary by plan.
For FSA plans with carryover, participants can now carry over up to $550 in unused funds to the next year. Each year from 2020 forward, the maximum carry over amount will be indexed to 20 percent of the maximum annual contribution limit.
Editor’s Note: In response to the expiration of the ARPA COBRA subsidy at the end of September 2021, the IRS issued Notice 2021-58 to clarify extension time frames under certain notices to COBRA elections and paying premiums during the pandemic.