COBRA Insurance: Extended Deadlines

As the COVID-19 pandemic continues its spread across the United States, the Department of Labor has been at work coming up with ideas that may ease some of the pain employers and employees are facing. As such, on May 4th, the Department of Labor (DOL) issued a new rule for companies with 20+ employees that not only temporarily extends the period of time in which an employee can elect COBRA health insurance coverage, but also the deadline in which they must submit their premium.

The Department of Labor knows it can be a challenge for employers and employees alike to meet certain standard timeframes with respect to COBRA benefits.

During March and April of 2020, over 20 million people lost their jobs and applied for unemployment. As companies furlough and lay off employees the DOL knows it can be a challenge for employers and employees alike to meet certain standard timeframes with respect to COBRA benefits. The new rule extends certain timeframes under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code for group health plans participants and beneficiaries.

Generally, after receiving a COBRA election notice from their employer, an employee who has been terminated or experienced a reduction in hours has 60 days to elect COBRA continuation coverage under a group health plan. Under the new rule, all group health plans subject to ERISA or the Code must disregard the period from March 1, 2020 until sixty (60) days after the announced end of the National Emergency (otherwise known as the “Outbreak Period”) or such other date announced by the Agencies in a future notification for all plan participants and claimants. For this purpose, if the emergency declaration expires as written on June 29, 2020, the Outbreak Period will end August 28, 2020.

Usually, people electing COBRA insurance have 45 days after their election to make their first premium payment, and a 30-day grace period is allowed for subsequent months payments. The new rule extends the initial and grace period deadlines beyond the Outbreak Period. In short, premiums for March, April and May at the very least are not required to be paid until 30 days after the end of the Outbreak Period. Unless the Outbreak Period is extended, COBRA participants can expect a premium due date of September 27.

Employers should prepare for the administrative challenges these deadline postponements can potentially create. Currently, it is unknown whether employers should review/update COBRA insurance notices to reflect the extended deadlines. Note, the 14-day deadline for plan administrators to provide COBRA election notices to terminated employees has not been extended.

The Department of Labor recently posted a new set of COVID-19 FAQ’s for Participants and Beneficiaries that can be accessed here:

Similarly, United Healthcare has prepared a FAQ sheet answering various COBRA insurance related questions. Its document can be found here:

Please reach out to Blue Chip Benefits at (888) 225.8244 or with any questions. We are here to support you!

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