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New COBRA Deadlines Give Employees More Time to Make Elections, Payments

healthy family on paddleboard at sunset with COBRA deadline options

A new rule to assist employees who have lost health insurance in the wake of COVID-19 extends deadlines to elect and pay for COBRA coverage. The joint rule by the IRS and DOL Employee Benefits Security Administration (EBSA), also extends the time to file benefit claims and appeal denied claims.

The new rule does, however, leave employers with unanswered questions.

“We don’t yet know how carriers will handle the change to the COBRA deadlines,” explains Director of Benefit Services Lori Rego at simplicityHR by ALTRES.

“Normally an employee cannot use the plan until the COBRA election and payment is received.  We are awaiting guidance on whether or not this will change. There is also no clarity on employer notification requirements regarding these loosened deadlines.”

Normally, employees who lose health insurance coverage due to a qualifying event (such as termination of employment or reduction of hours), have 60 days to elect continuation of coverage after coverage ends or the date they receive the COBRA election notice, whichever is later.   They then have 45 days to make initial payment, with coverage always beginning retroactive to the date coverage ended.

The new deadline extends to 60 days after the end of the COVID-19 “Outbreak Period.” The Outbreak Period is defined as March 1, 2020, to 60 days after the end of the declared COVID-10 national emergency, or another date if provided by the agencies in future guidance. The new rule also extends the premium payment period and grace period beyond the Outbreak Period.

No extension was granted for the 14-day deadline for plan administrators to furnish COBRA election notices, notes the Society for Human Resources Management.

New Model Notices Help Medicare-Eligible Employees

In another change to COBRA, the U.S. Department of Labor’s Employee Benefits Security Administration is requiring that COBRA notices be updated to include information to help Medicare-eligible employees navigate their choices.

They have issued revised model notices and related FAQs (PDF).

If an individual is eligible for both COBRA and Medicare, electing COBRA coverage may impact enrollment into Medicare as well as certain out-of-pocket costs. The model notices explain that there may be advantages to enrolling in Medicare before, or instead of, electing COBRA (Source).

More information about COBRA

COBRA coverage can be a lifesaver for employees who have lost their job and health insurance during the pandemic.

COBRA, or the Consolidated Omnibus Budget Reconciliation Act, is a federal law that gives employees the option to continue health insurance coverage after losing eligibility for employer-paid coverage.

Under COBRA, employees and their dependents have a right to temporarily continue health insurance coverage when group health coverage would otherwise be lost due to certain qualifying events.

Clients of simplicityHR should rest assured that all aspects of COBRA administration are being handled on your behalf to ensure compliance with these new rules.

Have a question for one of our HR experts? To learn more about this issue or to schedule a free consultation on the advantages of human resources outsourcing, contact simplicityHR.

This article is for informational purposes only and does not constitute legal advice. Readers should first consult their attorney, accountant or adviser before acting upon any information in this article.

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