During the Covid-19 crisis, many people may be feeling worried about maintaining access to health care and insurance coverage. While some organizations maintain their steady workforce, some are faced with lay offs and furloughs. The Department of Labor (DOL) recently released updates and clarifications relating to the Consolidated Omnibus Budget Reconciliation Act (COBRA) – including updated model general notices to employees and COBRA deadline extensions.
As a reminder, COBRA allows for continuation of employer health insurance coverage in the event of job loss or reduction of hours. Employees (and their spouses and dependents) who lose coverage under an employer’s health plan due to termination of employment or reduction of hours are entitled to continue that coverage for up to 18 months (under the federal law) and up to 36 months of coverage (under NYS). The individual also has 45 days of electing COBRA to make the initial premium payment.
Updates to COBRA Notices
On May 1, 2020, the DOL released updated model COBRA notices, which have not been updated since 2014. These notices provide employers a guide in outlining certain rights and options when it comes to continuation of employer-sponsored health insurance. While employers are not required to use these notices, it is important to check employer existing notices and make sure they follow DOL’s guidelines on COBRA elections.
The model notices can be found on the Department of Labor’s website.
Changes to COBRA Deadlines
On April 29, 2020, the DOL and Internal Revenue Service (IRS) issued extensions to time frames for employees to continue their employer-sponsored health insurance once their employment ends. As a reminder, an individual has 60 days from the date of receipt of the COBRA notice to elect COBRA, additional 45 days to pay the initial COBRA premium payments, and COBRA coverage could be terminated if they fail to pay on time.
Election Period Extension
One of the major updates to these time frames is how long the individual has to apply for COBRA coverage. The extensions apply to COBRA deadlines past the “Outbreak Period,” which is defined as being March 1, 2020, to 60 days after the end of the declared COVID-19 national emergency, or another date if provided by the agencies in the future.
What does this mean for a participant’s job loss?
Under non-emergency circumstances, if an individual was given a COBRA notice on April 1, 2020, that person has until 60 days (May 31, 2020) to decide on COBRA election. Under the new deadline, the individual now has 60 days from the end of the Outbreak Period. The end to the Outbreak Period has not been announced. For explaining these extensions, let’s say the National Emergency was defined to end May 31, 2020, the Outbreak Period will end July 30, 2020. That individual will have until September 28, 2020 , which is 60 days after the Outbreak Period to decide on COBRA coverage.
Premium Payment Extension
Normally, an individual has 45 days to make the initial COBRA premium payment, or have their COBRA coverage terminated. Under these new guidelines, deadlines to make an initial payment are extended until 30 days after the end of the Outbreak Period and does not require the individual to make payments during the emergency period. Keep in mind, the individual will still be responsible for those missing payments, but will have 30 days after the end of the Outbreak Period to pay those payments.
Kiwi Partners recommends updating your organization’s COBRA general notices to employees to be in compliance with these extension deadlines and to be proactive in communicating these changes to your staff.
As always, feel free to contact a Kiwi HR representative for best COBRA compliance practices.