In response to the COVID-19 pandemic, the US Department of Labor has released a new final ruling on COBRA coverage.
The new ruling sees a temporary extension to the period eligible employees have to elect COBRA health insurance coverage, along with extending the deadline for making COBRA premium payments.
These rules apply to anyone who becomes eligible for COBRA in the period between the announced National Emergency and the Outbreak Period end date. The Outbreak Period is being defined as the time from the first day of the National Emergency, to 60 days following the date that is announced as the last day of the National Emergency period. While the ruling defines March 1, 2020, as the first day of the National Emergency period, the end date of the National Emergency is yet to be defined.
COBRA 60-day election period
Normally, an individual has 60 days from their eligibility date to elect for COBRA. Under the final rule, if a qualifying event occurs during the outbreak period, the 60-day election period deadline ends 60 days after the National Emergency ends. This doesn’t mean an eligible employee can’t elect COBRA but their consideration period is effectively extended.
For example; if a staff member is 5 days into their 60-day COBRA election period on 3/1/2020, their election period deadline is extended until the outbreak period end date. On the Outbreak Period end date, this staff member has the remaining 55 days to decide on their election, which is itself retroactive.
COBRA normally allows 45 days from election to make the first premium payment, with subsequent monthly payments required within a 30-day grace period starting at the beginning of each coverage month. Under the new rule, a person who is on COBRA as of the National Emergency period start date (3/1/2020) and stops making payments has a 30-day grace period from the outbreak period end date (currently TBA) to make up missed payments, along with retroactive coverage for the months paid in full.
Employers and COBRA managers should prepare for the administrative challenges ahead. Extensions may leave employers and COBRA managers in the difficult position of providing and paying for services while employee coverage status is uncertain. With continuous changes and the unclear timelines, COBRA managers may consider supplementing or modifying the existing COBRA forms to reflect the extensions.
What we recommend:
- Employers should continue to provide COBRA notices and allow employees to elect within the standard timeframes or the extended timeframes, at the employee’s discretion.
- Allow employees to pay or elect to defer payments.
- If they defer payments, we suggest employers clearly state that retroactive payments will be due (back to the date of eligibility) when the emergency is lifted.
- Carefully monitor developments in this area because an employee who elects COBRA and then doesn’t pay may not be able to cancel retroactively if they have incurred claims, which may leave employers on the hook for premiums for that period.
- An addendum or note of these extensions should be provided to impacted employees.
How Insource Can Help:
If you require assistance in modifying existing COBRA forms or have any questions, Insource is on hand to provide guidance in all HR matters, including COBRA compliance.
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