COBRA in the time of COVID-19

COBRA compliance requires extra attention right now. Regulatory agencies have extended certain COBRA deadlines due to the COVID-19 pandemic. And the Department of Labor recently released new COBRA model notices. Now, more than ever, employers need to ensure that they remain compliant.

Extension of COBRA Notice Deadlines

In light of the COVID-19 crisis, the Internal Revenue Service and the Department of Labor have granted temporary relief to employers who fail to meet the above-discussed deadlines during the “Outbreak Period,” which began on March 1, 2020 and will end 60 days after the announced end of the COVID-19 National Emergency (unless another date is specified by the IRS/DOL). Nevertheless, every effort should still be made to provide COBRA election notices by the original deadlines due to a fiduciary duty to act in the best interests of participants by letting them know their COBRA election rights. In addition, an employer should send COBRA notices per usual as it might increase its chances to collect COBRA premium payments from COBRA participants during the Outbreak Period, although COBRA premium payment deadlines have also been extended.

Changes to Model COBRA Notice

The COBRA election notice should be carefully worded and should closely follow the DOL’s new model notice. The employer or administrator should take care to complete the DOL’s model notice in the fields where it requires information that must be tailored to the employee, employer, or plan, such as when and how to elect COBRA coverage, where and how to pay COBRA premiums, and deadlines for premium payments.

COBRA Premium Payment Deadlines Extended

COBRA premium payment deadlines have been extended such that COBRA participants are not required to make COBRA premium payments during the COVID-19 Outbreak Period and will still be entitled to COBRA coverage during the Outbreak Period if they make up all premium payments by the new deadline that occurs after the Outbreak Period.

Employers will have to consider how to address the potential lag in premium payments. For fully-insured health plans, the insurance carrier might require full payment of the COBRA premium by the employer so that coverage does not lapse altogether, thereby forcing the employer to carry the costs for the interim period. For self-funded health plans, employers might continue to pay claims and seek recoupment from the COBRA participant if coverage is retroactively terminated, or they might consider pending claims until the premiums are received. Pending claims might become challenging if the Outbreak Period lasts for several months.

Questions or need assistance with COBRA? Contact our COBRA On-Demand expert, Tracy Brouwer, at (320) 214-2948.