On Monday, May 4, 2020, the Employee Benefits Security Administration of the Department of Labor and the Internal Revenue Service jointly published a Rule in the Federal Register significantly extending the periods of time in which employees may elect COBRA health insurance continuation coverage and begin paying their premiums in the midst of the continuing COVID-19 pandemic. The full text of the Rule may be accessed at: https://www.federalregister.gov/documents/2020/05/04/2020-09399/extension-of-certain-timeframes-for-employee-benefit-plans-participants-and-beneficiaries-affected
Specifically, health insurance plan administrators are directed to “disregard the period from March 1, 2020 until sixty (60) days after the announced end of the National Emergency… (the ‘Outbreak Period’)” for purposes of calculating election and premium payment deadlines. A similar extension applies to other time frames such as the 30-day period to request special enrollment under HIPAA, such as for the birth of a newborn child, and for deadlines for filing appeals of adverse benefit determinations under ERISA-covered plans.
The rule provides several examples of how the COBRA deadline extensions work, all of which are predicated upon an assumption that the “National Emergency” ends on April 30, a date which has already passed and thus will be subject to further extension. One such example involves an employee who experienced a COBRA-qualifying event because of a reduction in work hours below the minimum required to sustain normal eligibility and was, as a consequence, provided a COBRA notice on April 1. Under normal circumstances, the employee would have had 60 days to elect COBRA continuation coverage, or until May 31. Under this newly issued rule, however, the Outbreak Period between March 1 and June 29 must be disregarded, and the last date for electing COBRA would be 60 days after June 29, or August 28, 2020 (again assuming an end date of the National Emergency of April 30).
Other examples set forth in the Rule illustrate how normal COBRA premium payment deadlines are similarly extended. One such example involves an employee who was already on COBRA as of March 1, 2020, and whose normal 45 days to make his first premium payment had already passed. The employee had made a timely payment for the month of February but did not make a payment for the month of March within the plan’s 30-day grace period (March 30), nor did he make any payments for April, May or June. Again, the Outbreak Period must be ignored, and that employee would have until 30 days following June 29 (by July 29) in which he could make payments for all four months. If he does that, then any claims incurred during those months must be covered by the health insurance plan. (Another example assumes that the employee only makes two monthly payments by July 29, in which case only those claims incurred during the first two months would have to be picked up by the plan.)
The Rule does not provide any illustrations of an employee who was not on COBRA prior to the beginning of the Outbreak Period of March 1, but presumably such an employee would also have 45 days from the (extended) election deadline of August 28 – or until October 12 – to make his first premium payment for any and all coverage dating back to his original loss of the coverage. (Again, all those assumed dates set forth in the Rule will likely be pushed back at least 15-30 days, depending on when an end to the National Emergency is actually declared.) As a consequence of all of these extensions, some employees who do not return to work may obviously be encouraged to “roll the dice” to see whether they actually need to file a claim under the employer’s policy before making even a single payment. Others may wait to find out if they are recalled to work and resume normal coverage under the employer’s health insurance plan before making a COBRA premium payment (if the specific plan rules allow that.)
Three days before the publication of the new Rule, the Department of Labor also disseminated newly-revised COBRA Notices, including a “Model General Notice” and a “Model Election Notice.” (The Notices are available in both English and Spanish.) While employers are not technically required to use these new model notices, the DOL has emphasized that if employers do use such model forms, they will be considered as acting in good faith compliance with COBRA notice requirements. The new model forms may be found at:
Because legal developments pertaining to COVID-19 are constantly evolving, we recommend that our clients call the Kullman Firm attorney(s) with whom they work for the most current guidance on these matters.