Reelin’ in the Year: DOL Clarifies COBRA Time Frames Related to COVID-19

COBRA time frames and COVID-19 extensions

On Friday, February 26, the Department of Labor (DOL) published Disaster Relief Notice 2021-01, a follow up to the Joint Notice published May 4, 2020. The May notice required that health and retirement plans disregard a number of deadlines for individuals during the COVID-19 National Emergency, plus a 60-day period (the “Outbreak Period”) starting March 1, 2020.

The COBRA deadlines impacted in the May 2020 notice include:

  • Deadline for participants to elect coverage;
  • Deadline for participants to pay premiums;
  • Deadline for plan to provide election notice

The February 26 notice clarifies the position of the DOL and IRS that the one-year COVID-19 extensions will continue past February 28th, and that the extensions must be measured on an individual, person-by-person basis. Prior to last Friday’s announcement, most viewed the May 2020 guidance as applying as a whole, single period beginning March 1, 2020 and ending February 28, 2021, under the one-year statutory limitation.

The tolling period applies to the shorter of:

  • the 12-month clock for a Qualifying Beneficiary (QB) who was eligible for COBRA to make an election/make payment, or
  • 60 days after the end of the COVID-19 National Emergency

In addition, if a QB’s clock started prior to March 1, 2020, the elapsed time counts and the clock restarts on March 1, 2021 with the remaining days still available.

Examples for COBRA Tolling Periods due to COVID-19

Following this clarification, here are some examples of how it could apply:

Example 1: A QB gets the full 12-month extension because the COVID-19 National Emergency is still ongoing

If John Q became eligible for COBRA on March 1, 2020, the 60-day period to elect COBRA begins March 1, 2021.

Example 2: A QB is COBRA-eligible, but the National Emergency ends before his personal 12-month period expires

If John Q became COBRA eligible on July 1, 2020 but the National Emergency ends April 1, 2021, then John Q’s clock to elect would begin May 31, 2021 (end of the National Emergency + 60 days). He would not get the full 12 month extension because the National Emergency ended.

Example 3: A QB’s election window began before the March 1, 2020 National Emergency start date

If John Q was eligible for COBRA on February 1, 2020, his clock would have started on February 1, but paused on March 1, 2020. The clock resumes on March 1, 2021 with 31 additional days to elect since 29 days had already expired.

Additional Concerns Needing Clarification

As COBRA administrators attempt to rectify delays to elections and payments, there are some additional items that industry legal experts are looking to resolve.

  1. While not explicitly required, what notices should plans consider sending? This could apply to:
  • An individual notice about the expiration of individual extensions
  • Updated supplemental notice to QBs who were eligible for COBRA after January 1, 2020 regarding how this new guidance affects them
  • Information about the Health Insurance Marketplace established by Executive Order 14009
  1. What constitutes a “reasonable accommodation,” as referenced in Notice 2021-01? 
  2. How could potential COBRA subsidies (passed by the House and under consideration by the Senate) affect employers and premiums?

In the coming weeks, the industry hopes to have more answers to these lingering questions. It may be in the best interest for COBRA administrators to contact insurance carriers to see how the February 26 notice impacts their beneficiaries’ plans and how to proceed.

This article does not constitute legal advice. COBRA administrators should contact their qualified benefits counsel for more information.

Editor’s Notes: A number of subsequent notices have been implemented to deal with ongoing financial and economic distress. For example, IRS Notice 2021-58 addresses extension and payment issues relating to COBRA coverage.

President Biden has announced a strategy called “Path out of the Pandemic” to recover from the financial and economic toll this health issue has created. The administration is also promoting a “Build Back Better” agenda to create jobs, cut taxes and lower costs to continue with economic recovery.

As executive branch, legislative and regulatory efforts continue, it’s important to stay up to date on how these programs may affect employers and employees. Contact your third-party administrator (TPA) or qualified benefits counsel to determine the best direction for your employer plans.

For 40 years, DataPath has been a pivotal force in the employee benefits, financial services, and insurance industries. The company’s flagship DataPath Summit platform offers an integrated solution for managing CDH, HSA, Well-Being, COBRA, and Billing. Through its partnership with Accelergent Growth Solutions, DataPath also offers expert BPO services, automation, outsourced customer service, and award-winning marketing services.

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