Issue 19

DOL Issues New Guidance on Extension of Time Frames

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On May 4, 2020, the Department of Labor (DOL), Internal Revenue Service, and Department of the Treasury issued the EBSA Disaster Relief Notice 2020-01 and Joint Notice, which provided an extension of certain time frames affecting a participant’s right to health care coverage and continuation of group health plan coverage under COBRA.

These extensions were effective March 1, 2020, and were to be extended until 60 days after the declared end date of the COVID-19 National Emergency (also referred to as the “Outbreak Period”); however, under section 518 of ERISA and section 7508A(b) of the code, the extension period is limited by statute to a period of one year from the date the individual action would have otherwise been required.

As Feb. 28, 2021, marks one year of the National Emergency, the DOL issued new guidance on Feb. 26, 2021, to clarify the duration of the relief provided under the original EBSA Disaster Relief Notice 2020-01 and Joint Notice. According to this guidance, eligible individuals should be granted an extension to applicable time frames until the earlier of (a) one year from the date they were first eligible for relief or (b) the end of the Outbreak Period. On the applicable date, the time frames for individuals with periods that were previously disregarded will resume. In no case will a disregarded period exceed one year.

What does this mean for your COBRA participants?

COBRA election period:

Under normal circumstances, a COBRA qualified beneficiary (QB) has 60 days to elect COBRA.

Per the newly released guidance, a COBRA QB will have up to a maximum period of one year to make an election of COBRA. The extension deadline will be determined on a per participant basis.

Example: If a COBRA QB would have been required to make a COBRA election by March 1, 2020 (normal 60-day deadline date), the Joint Notice delays that requirement until Feb. 28, 2021, which is the earlier of one year from March 1, 2020, or the end of the Outbreak Period (the National Emergency remains ongoing).

Similarly, if a COBRA QB would have been required to make a COBRA election by March 1, 2021 (normal 60-day deadline date), the Joint Notice delays that election requirement until the earlier of one year from that date (i.e., March 1, 2022) or the end of the Outbreak Period.

NOTE: An election of COBRA must be made for coverage to be activated. If a completed election form is not received, coverage will not be reinstated.

COBRA premium payment period:

Under normal circumstances, a COBRA QB has 45 days after submitting their COBRA election to remit their initial premium due. Subsequent premium payments are due on the first of the month of coverage, with a 30-day grace period.

Per the newly released guidance, a COBRA QB will have up to a maximum period of one year to submit premium payment in full for any past due premiums. The extension deadline will be determined on a per participant basis.

Example: A COBRA QB stopped making premium payments and is paid in full through Feb. 28, 2020. The COBRA QB owes monthly premiums for March 2020 – current. Normally, premium payment for March 2020 would have been due by March 31, 2020 (normal 30-day grace period). The Joint Notice delays that requirement until March 31, 2021, which is the earlier of one year from March 31, 2020, or the end of the Outbreak Period (which remains ongoing).

Similarly, if a COBRA QB would have been required to submit payment for March 2021 premium by March 31, 2021 (normal 30-day deadline date), the Joint Notice delays that requirement until the earlier of one year from that date (i.e., March 31, 2022) or the end of the Outbreak Period.

A COBRA QB is not required to make all past due payments if the QB only needs the coverage through a certain date; however, there can be no gap in coverage. Meaning, if a COBRA QB only submits enough payment to cover two months of premiums owed, the payment will be applied in chronological order, beginning from the earliest month owed. Using the example above, payment would be applied to March 2020 and April 2020 premiums, resulting in a final COBRA coverage termination date of April 30, 2020.

Enrollment and claims

Throughout the National Emergency, UPMC Benefit Management Services has not terminated any COBRA QBs’ coverage with the insurance carrier(s) for nonpayment of premiums. COBRA QBs’ benefits have remained active, and claims have been paid accordingly.

Now that premium payment deadlines are back in place, we will resume reporting nonpayment terminations of COBRA coverage benefits to the insurance carriers accordingly.

Using the example above, if a COBRA QB owes retro premiums for March 2020 – current, the QB has until March 31, 2021, to submit payment. If payment is not received by March 31, 2021, we will report a termination of COBRA benefits to the insurance carrier(s), retro effective to the last paid-thru date (in this example, the term date would be Feb. 28, 2021). Any associated claims will be reversed and will be the COBRA QB’s responsibility.

Alternative options

The Biden administration has made available a new Special Enrollment Period because of the COVID-19 public health emergency for 2021. Individuals can enroll in Marketplace health coverage between Feb. 15 and Aug. 15, 2021. State exchanges as well as the Federal Marketplace have information pertaining to this enrollment period on their websites.