IRS and Department of Labor joint rules effective May 4, 2020 created a new COBRA universe by extending both group health plan deadlines for providing COBRA election notices and employee deadlines for electing COBRA continuation coverage — and paying for it. These deadlines are extended for the entire “Outbreak Period,” which started March 1, 2020 and ends 60 days after the officially declared end of the COVID-19 national emergency.
WHO IS AFFECTED?
This period (which extends into the indefinite future) is “ignored” for deadline purposes and affects all plan participants who become eligible for COBRA coverage at any time after March 1, 2020. This will impact virtually all employees with group health coverage who have been laid off or terminated because of the COVID-19 crisis.
Employers with group health plans may benefit from the postponement of their deadline for providing COBRA election notices to COBRA eligible employees. However, plan sponsors need to recognize that both an employee’s 60-day period for electing COBRA coverage and the employee’s deadline for making the initial premium payment within the 45-day period following such an election have not yet even begun to run. Employers, their contract COBRA administrators, and presumably group health insurers cannot rely on the now superseded employee deadlines to discontinue coverage.
WHAT EMPLOYERS NEED TO DO
Employers with group health plans should advise employees and former employees whose employment terminated at any time after March 1, 2020 of these extended deadlines. This will help protect those employers from employee claims that they were not adequately advised of their rights to elect COBRA continuation coverage.
This is particularly important with respect to employees terminated on or after March 1 who have already received defective COBRA notices that fail to reflect the new COBRA deadlines. So, it makes sense for employers to stop using their current COBRA notice forms because they have time either to provide corrected notices or to provide information to supplement their current notice form.
Note that contract COBRA administrators and group health insurers (or claims processing agents for self-funded plans) may not assist employers with updated participant communications on a timely basis.
DEPARTMENT OF LABOR GUIDANCE
The Department of Labor also recently released new model COBRA notices. These model notices should be followed as closely as possible in order to protect against suits like the class action recently filed against Amazon alleging its failure to properly notify employees of their COBRA rights. If this can happen to Amazon, it can happen to your organization — unless you take appropriate action.
CONSULT A PROFESSIONAL
As ever, Golan Christie Taglia can assist with any questions or concerns that you may have regarding this additional complication faced by employers during the COVID-19 shutdown. To discuss your particular situation, please feel free to contact: