This week the DOL and IRS issued a joint rule which provides relief from certain deadlines for group health plans, other welfare benefit plans, and retirement plans. The guidance applies to all plans covered by ERISA or the Code, and HHS has announced it will extend similar relief to non-federal governmental health plans. This post examines the relief granted for COBRA compliance.
All group health and welfare benefit plans subject to COBRA must now disregard the period from March 1, 2020 until sixty (60) days after the announced end of the National Emergency (the “Outbreak Period”) for all plan participants, beneficiaries, qualified beneficiaries, or claimants when determining deadlines for COBRA.
The multiple COBRA deadlines that have been extended until after the Outbreak Period ends, include:
- the 30 or 60-day deadline for employers or individuals to notify the plan of a qualifying event;
- the 60-day deadline for individuals to notify the plan of a determination of disability;
- the 60-day deadline for participants to elect COBRA; and
- the 45-day deadline to make a first premium payment and 30 day deadline for subsequent premium payments.
In addition, the Outbreak Period is disregarded when determining the date the plan must send a COBRA election notice to individuals whose coverage is ending, which provides significant relief to those employers whose operations may be shut down right now.
To aid in understanding this delay, below are two examples of common COBRA situations:
Example 1: Arthur works for ABC Inc. and participates in its group health plan. Due to Covid-19 work shortages, Arthur has his hours reduced which triggers a qualifying event for COBRA purposes. His coverage ends on March 25, 2020. Arthur is sent a COBRA election notice on April 1, 2020. What is the deadline for Arthur to elect COBRA presuming the National Emergency ends on June 29, 2020?
Conclusion 1: As required by this new rule, the Outbreak Period is disregarded for purposes of determining Arthur’s COBRA election period. The last day of Arthur’s COBRA election period would now be 60 days after June 29, 2020, which is August 28, 2020.
Example 2: Betty was enrolled in ABC Inc.’s group health plan but lost her job in a layoff. Presume that on March 15, 2020, she elected COBRA under ABC, Inc.’s health plan, and more than 45 days have now passed since she had elected COBRA. Monthly COBRA premium payments are due by the first of the month, and the plan only has a 30-day grace period for making premium payments. Betty made a timely March payment, but did not make the April payment or any subsequent payments during the Outbreak Period. As of July 1, Betty has made no premium payments for April, May, or June. Does she lose COBRA coverage, and if so for which month(s), presuming the National Emergency ends on June 29, 2020?
Conclusion 2: As required, we disregard the Outbreak Period when looking at whether Betty’s COBRA payments are timely. Provided Betty makes timely payment for April, May, and June within 30 days after June 29, 2020, which is July 29, 2020, Betty can maintain COBRA continuation coverage for these months.
As you can see, these new delays will take some getting used to for plan sponsors, administrators, and plan participants. If you have any questions about these new rules or any COVID-19 related benefits issues please contact any of Graydon’s employee benefits team.
