In response to the COVID-19 pandemic, the federal government has extended certain deadlines applicable to employee benefit plans, including deadlines and periods under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) with respect to temporary continuation of group health plan coverage that participants would otherwise lose as a result of certain life events.
Specifically, under recently issued final regulations and additional guidance from the Department of Labor (DOL), the period beginning on March 1, 2020, and ending “60 days after the announced end of the National Emergency” (or such other date as may be announced in a future notice) must be disregarded for all plan participants, beneficiaries, qualified beneficiaries, or claimants when determining certain deadlines described in the final regulations. This period is referred to in the regulations as the "outbreak period."
For purposes of COBRA, the disregarded outbreak period generally gives individuals more time to act and is applicable to:
- The deadline for individuals to notify the plan of a COBRA qualifying event.
- The period during which individuals may elect COBRA coverage.
- The deadline for individuals to pay COBRA premiums.
In addition, plans that are subject to COBRA requirements may disregard the outbreak period when calculating the deadlines for purposes of providing COBRA notices. In other words, employees now have a significantly extended period to decide whether or not to elect COBRA continuation coverage.
In general, COBRA notices should be carefully drafted. This is particularly true in light of a recent increase in litigation revolving around COBRA. DOL recently updated the model notice it previously issued, and this updated model generally should be used. However, given the coronavirus-related modifications described above, affected individuals should be informed of this added flexibility. It is therefore important to ensure that such communication is made clearly and in a timely fashion.
Also, the extended period during which affected individuals are allowed to pay applicable COBRA premiums is likely to cause some administrative problems. Insurers might require that premium payments be timely made under any applicable agreement, which may force employers to pre-pay COBRA premiums. Self-insured plans might be tempted to delay the processing of claims until premiums are paid, but health care providers might require payments earlier. Some coordination between the plans and third-party providers will probably be needed to avoid potential disputes.
As a result, employers and plan administrators should make certain that applicable notices and related employee communications are drafted clearly, accurately, and comprehensively to reflect the current legal environment. Employers and administrators should also be proactive and coordinate with third-parties (e.g., insurers and COBRA administrators) to avoid misunderstandings and potential disputes.