As part of the American Rescue Plan Act, several federal agencies have published new guidance addressing pandemic-related deadlines and benefits extensions. Among the details of the latest COVID relief bill are those describing continued COBRA healthcare coverage and eligibility for government-sponsored subsidies.
This federal update extends previous deadlines for COBRA healthcare coverage and offers to pay 100 percent of qualified COBRA insurance premiums through September 30, 2021 to many hourly employees. Even so, there has been plenty of confusion about what this actually means for employers. As more details are clarified, let’s discuss what we know so far.
What is Going On With COBRA Coverage?
As you know, Consolidated Omnibus Budget Reconciliation Act (COBRA) has been the federal government’s way of offering continued group healthcare benefits for a limited period to workers who have lost their employer-sponsored coverage due to specific circumstances, or “life events.”
The Department of Labor (DOL)’s initial deadline for COBRA relief during COVID-19 had anticipated the pandemic "outbreak period" or "national emergency" phase to last less than year, and therefore faced limitations. Now that we are beyond the one year mark, employers have been anxious to learn how coverage has been impacted.
Under the previous final rule from back in May 2020, the timeframe in which employees could elect COBRA coverage, as well as the deadlines for them to begin paying premiums, was temporarily extended beyond the pandemic outbreak period—which it uncertainly defined as running from March 1, 2020, 60 days after the end of the declared COVID-19 national emergency, or other federally provided date.
Since the deadline suspension was retroactive to March 1 of last year, relief was set to expire after Feb. 28, 2021. Luckily, just two days before the one-year expiration date, new federal guidance was distributed.
Updates to COBRA Coverage in 2021
Under the new COBRA guidelines, as defined in the American Rescue Plan Act, deadlines regarding COBRA, HIPAA special enrollments, and benefits claims and appeals timeframes will now end either:
- One year from the date the deadline would have occurred on or after March 1, 2020, absent the previous extension guidance; or
- 60 days after the announced end of the “outbreak period” or “national emergency” – which ever occurs first.
This means that COVID-related COBRA coverage may continue past the previously anticipated deadlines, and should be determined on an individual basis.
Here are two helpful examples that were included in the federal notice for further clarification:
- For an employee whose employment was terminated before March 1, 2020, but whose COBRA 60-day election timeline had already started, timeline suspensions ended on Feb. 28, 2021.
- For an employee whose timelines would have started running after March 1, 2020, but were suspended, those timelines will continue to be "paused" for up to one year from the date they would have started, or 60 days after the federal government declares an end to the pandemic's national emergency, whichever occurs first.
According to SHRM, the DOL is in the process of figuring out how to effectively notify each individual employee when their one-year extension is nearly up, so you can fulfill any required notification process compliantly.
Next Steps for Employers
Since the DOL delay notice requires a case-by-case review of an individual's entitlement to benefits, you will have to understand the individual needs of each employee. To ensure ultimate success, consider the following tips by law firm Jackson Lewis:
- Contact all COBRA and other relevant TPAs to formulate a plan of action for notifying to existing and COBRA-eligible employees on applicable deadlines.
- For terminated employees who have deferred electing COBRA coverage for any periods on or after March 1, 2020, send updated notices detailing coverage and rate options, as well as election and payment deadlines.
- For employees who are already enrolled in COBRA, but who have been deferring payments, consider sending a notice requesting payment of all prior months' premiums that may be owed. Allow payment installments with a "grace period" to complete payment before COBRA coverage terminates.
- Update notices about extensions on employees’ benefits websites, COBRA forms, HIPAA special enrollment notices or any other group health plan communications issued by your business.
HR Support Through COVID-19
Your HR software should make it easier to carry out COVID-related initiatives, not harder. With EPAY Systems’ HR Consulting Services, benefits administration and federal compliance are a whole lot easier to navigate. Whether it be a phone call clarifying a new federal law, a long-term project for adapting your operational policies, or creating materials to communicate changes to individual employees’ benefits—we’ve got you covered.