The COVID-19 pandemic brought changes to many health insurance related items; one of the biggest changes was to federal COBRA administration. COBRA, which allows a person to continue group health coverage upon loss of eligibility for that coverage, normally requires a person to make COBRA elections and initial premium payments within short timeframes – 60 days and 45 days, respectively. However, because of the challenges with the pandemic, deadlines for electing COBRA coverage and making premium payments were (and still are) disregarded – allowing most COBRA-eligible persons up to one year to make COBRA elections and premium payments.
Regulators clarified in February 2021 that a person’s COBRA-election period and a person’s timeframe to make COBRA premium payments would be disregarded for up to one year from the date the person first became/becomes eligible for COBRA, or within 60 days after the conclusion of the ongoing “outbreak period” – whichever comes first. The “outbreak period” concludes when POTUS declares an end to the ongoing “national emergency.”
March 2021 brought the American Rescue Plan (ARP) Act, which created federal subsidies to help many COBRA participants fund their premium payments for up to a six-month period (April–September 2021). The subsidy window, however, required COBRA-eligible persons to make immediate elections in order to obtain the subsidy – conflicting with previous COVID-19 COBRA guidance, which still exists now that the COBRA subsidy window has concluded.
Recently, regulators released additional information regarding COBRA election and benefit payments. The new regulations provide clarity on these overlapping items, as the pandemic continues to linger through its second – and likely into its third – year.
The new guidance applies as follows:
- * For a person who elected COBRA during the disregarded (one year) period, outside of the traditional 60-day election window: COBRA premium payment must be made within one year and 105 days after the COBRA election notice was provided.
- * For a person who elected COBRA during the traditional 60-day election window: COBRA premium payment must be made within one year and 45 days after the COBRA election notice was provided.
- * For every payment thereafter (during the ongoing “outbreak period”), COBRA premium payment is due within one year from the date the original payment is (was) due, including up to a 30-day grace period.
Reminder: COBRA elections must be made within one year and 60 days during the ongoing “outbreak period.” In most circumstances, consistent with existing COBRA law, COBRA coverage will be retroactively effective. COBRA coverage generally begins the day after coverage was lost. If a person elects COBRA retroactively utilizing this relief, retroactive premium payments must generally be paid.
Additionally, to address confusion on COBRA premium due dates during the initial months of the ongoing “outbreak period,” one-time transitional relief is available for persons who elected COBRA outside of the traditional 60-day election window, during the initial months of the outbreak period. Under this transition relief, a person who elects COBRA during the disregarded (one year) period, outside the traditional 60-day election window, will not have to make any premium payments until November 1, 2021.
This applies even if November 1, 2021 is more than one year and 105 days after the initial COBRA election notice was received. However, the initial COBRA payment must be made within one year and 45 days after the date of the COBRA election in order to be eligible for this relief. Furthermore, when utilizing this transition relief (as applicable), all COBRA premium payments for coverage through November 2020 must be included in the initial payment due by November 1, 2021.
Example: Alex has a COBRA qualifying event on April 1, 2020, and receives the COBRA election notice on the same day. Alex elects COBRA continuation coverage on October 1, 2020 (coverage is retroactively effective 4/1/20, and retroactive premiums must eventually be paid). As of July 15, 2021, Alex has not made the initial premium payment or subsequent premium payments. Under the aforementioned transition relief, Alex has until November 1, 2021 to make the initial premium payment because November 1, 2021 is more than one year and 105 days after April 1, 2020 (the date the election notice was received) and less than one year and 45 days from October 1, 2020 (when COBRA was elected). However, to utilize this transition relief, Alex must include payment for April 2020 through October 2020 by November 1, 2021 in the initial payment.
The premium for November 2020 would be due by December 1, 2021 (one year and 30 days after it was initially due). Subsequent monthly premium payments are due each month thereafter until Alex is no longer eligible for COBRA continuation coverage, or until Alex drops COBRA coverage altogether. Note: The carrier will not be responsible for benefit payments for months for which premiums remain unpaid.
Lastly, regulators clarified that timeline extensions for COBRA premium payments and elections do not apply when utilizing the ARP Act’s federal COBRA subsidies, during the April–September 2021 window. A person who has a disregarded timeframe for COBRA elections and premium payments may elect COBRA coverage retroactively, as described in this column. However, if the person utilized COBRA subsidies (as applicable), the guidance resumes at the conclusion of the subsidy period – assuming the person is still eligible for COBRA continuation coverage after the subsidy window, and the “outbreak period” is still ongoing.