COVID-19 COBRA Extensions
On May 1, 2020, the Department of Labor (DOL), through its Employee Benefits Security Administration (EBSA), released updates and clarifications related to the Consolidated Omnibus Budget Reconciliation Act (COBRA), including two new model COBRA notices, and an extension of deadlines for electing COBRA coverage and paying premiums. Additionally, new guidance regarding COBRA and Medicare interactions and non-COBRA health insurance options for terminated employees was included in a separate FAQ. These updates, driven by the COVID-19 pandemic, are applicable immediately and will expire on January 31, 2023, unless readdressed before then.
Plan sponsors need to understand these updates and make changes to COBRA administration to avoid potential non-compliance liabilities. Of particular note is the use of the term “outbreak period.” The outbreak period is defined as being the period beginning March 1st, 2020 up through the 60 days following the announced end of the National Emergency, or pandemic.
For example, if the pandemic is declared to be over on August 1st, 2020, that means that the “outbreak period” ends on September 29th, 2020.
Overview of COBRA Provisions Affected by COVID-19
The bellow chart provides an overview of the provisions affected and the temporary relief being provided during this outbreak period.
| Provision | Regular Rules | Temporary Rules |
|
Participant Responsibilities |
||
| Special enrollment in an employer-sponsored group health plan | 30 days (or 60 days when applicable) from the date of the Qualifying Event | 30 days (or 60 days when applicable) following the end of the Outbreak Period |
| Elect COBRA coverage under a group health plan | 60 Days following the date coverage terminates or the date they receive notice of their COBRA rights | Up to 60 days following the end of the Outbreak Period |
| Initial COBRA payment | Within 45 days of electing COBRA | Within 45 days following the end of the Outbreak Period |
| Timely subsequent COBRA monthly premium payments | 30 days from the beginning of each calendar month | Up to 30 days following the end of the Outbreak Period |
| Filing a benefit claim | Determined per the terms of the specific plan | Up to the plan-designated deadline following the end of the Outbreak Period |
| Appeal and adverse claims decision under a group health plan | 180 days following the receipt of the claims determination | Up to 180 days following the end of the Outbreak Period |
| Request for an external review of adverse benefits claim for claims under non-grandfathered group health plans | Within 4 months of receipting the claims determination | Up to 4 months following the end of the Outbreak Period |
|
Employer Responsibilities |
||
| Notifying the plan administrator | Must be completed within 30 days of the employee’s qualifying event | Unchanged |
| Notifying the eligible employee | Must provide the notice to the employee of their right to elect within 14 days after the plan administrator has received notice | Unchanged |
| Administration fee | Employers are permitted to charge a 2% administration fee on top of the premium which is charged to the employee | Unchanged |
| Ability to term COBRA participants off the plan for non-payment | If a participant does not provide the initial payment within 45 days of election or if they fail to make timely monthly payments within 30 days of the 1st of the month the employer may term them from the plan | The employer may not term COBRA participants on the plan for non-payment until after 45 days after the end of the Outbreak Period for the initial payment or until after 30 days after the end of the Outbreak Period. |
Aldrich is Here to Help
Our Aldrich Benefits team is monitoring the changing landscape of the insurance industry will continue to provide updates regarding and changes that may affect your plan. For more resources to help you navigate the developing impact of coronavirus on your business, visit our COVID-19 Resource Center. Please reach out to your Benefits Advisor if you have questions specific to your plan.
Meet the Author
Evan Cole partners with his clients to advise and assist them with their employee benefit plans, specializing in group and association plans. Prior to joining Aldrich, Evan was a top producing employee benefits representative for one of the nation’s largest life, disability, and dental carriers. He holds licenses for life and health in the states... Read more Evan Cole
Evan's EXPERTISE
- Employee benefits
- Leave management
- Self-funding
- Ancillary benefits
- Small group
- Large group
