New Model Federal COBRA Notices and Emergency Extensions to COBRA Deadlines

By Tony Haberman, President, The Haberman Group, tony@thehabermangroup.com

The Department of Labor (DOL) released updates and clarifications related to employee benefits, including updates to the current model COBRA notice and an extension of certain statutory deadlines intended to minimize the possibility of participants and beneficiaries losing benefits during the COVID-19 pandemic.

WHO HAS TO COMPLY?

New York employers that have employed at least 20 or more full and part time employees on more than 50% of their typical business days in the previous calendar year. As of today, employers with less than 20 full and part time employees are NOT affected by this new extension; however, that could change in the future.

NEW COBRA MODEL NOTICE

On May 1, 2020, the DOL released a revised model COBRA Notice. The primary update to the notice is a new section regarding Medicare eligibility versus COBRA continuation. It was revised to make sure there is a clearer understanding between Medicare and COBRA. The updated section is titled, “Can I enroll in Medicare instead of COBRA continuation after my group health plan coverage ends?”

COBRA DEADLINE EXTENSION NOTICES  

On April 29, 2020, the DOL and Internal Revenue Service (IRS) issued a joint notice that provides guidance for participants and employers on certain deadlines in relation to COBRA notifications, elections and payments. Prior to this announcement, an employer had to furnish the participant within 14 days of the loss of coverage with the COBRA letter; a qualified beneficiary had 60 days from the date of receipt of the COBRA notice to elect COBRA; and another 45 days after the date of the COBRA election to make the initial required COBRA premium payment. The participant’s coverage also could be terminated for failure to make a timely payment if not received within the 30-day grace period.

The Joint Notice not only extends the above statutory deadlines but also extends many other participant-related deadlines such as HIPAA special enrollments, claim appeals and external review filings by requiring plans to disregard the period from March 1, 2020, until 60 days after the announced end of the National Emergency (defined as the “Outbreak Period”).

COBRA ELECTION PERIOD EXTENSION  

Under the new guidance, once a participant receives their COBRA election notification, the applicable COBRA election deadline will be 60 days from the end of the Outbreak Period. Currently there is no end date to this National Emergency and therefore no end date can be provided. Of course, the participant does not have to wait until the end of the election period to elect COBRA and once COBRA is elected and the initial payment is made, the coverage will be retro reinstated to the termination date noted in the COBRA letter.

For example, this means if a qualifying beneficiary receives the election notice on or after March 1, 2020, the 60-day initial COBRA election period does not begin until the end of the Outbreak Period. The participant then has another 45 days after that to make the initial required COBRA premium payments.

COBRA PREMIUM PAYMENT EXTENSION

For individuals already on COBRA, they can pause their COBRA payments. With the new time-frame extensions, current COBRA participants have an additional 30 days from the end of the Outbreak Period to submit all retro-payments. During this timeframe, the employer and health insurance carrier cannot terminate the coverage or reject any claims for non-payment of premium.

For example, an individual previously elected COBRA and has been paying monthly COBRA premiums since March 1, 2020. That individual does not have to pay applicable monthly COBRA premiums for April, May, June, or July. Under the extension guidance, the Plan must allow the individual until 30 days after the end of the Outbreak Period to fully pay all prior months of COBRA premiums to maintain the COBRA coverage.

EMPLOYER COBRA NOTICE PERIOD EXTENSION   

The Joint Notice also provides employers extra time to furnish the COBRA election notice but the guidance is unclear about the actual extension. The suggestion is to provide the COBRA election as soon as administratively possible; since delay in furnishing the notice could create a financial hardship for the COBRA participant. Until further guidance is issued, it is recommended that employers and administrators continue to send the COBRA election notices based on existing law and rely on the extension only if necessary.

Many participants and employers will have questions with the above new guidelines and it is strongly recommended that employers consult with a COBRA administrator and/or an employee benefits advisor.



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