Getting “back to normal” as the COVID-19 pandemic has eased has not been simple for anyone. In terms of plan administration, the continued tolling of employee benefit plan deadlines, including those related to continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA), has kept plan administrators firmly planted in a “COVID-19 world,” even as many other employment practices returned to normal.
In the latest sign that pre-pandemic normalcy is slowly returning, on April 10, 2023, President Joe Biden signed legislation to end the COVID-19 national emergency effective immediately, meaning that the requirement to extend COBRA deadlines due to the COVID-19 pandemic will soon end, as well.
Early in the pandemic, on May 4, 2020, the Internal Revenue Service (IRS) and the U.S. Department of Labor (DOL) issued a joint notice that provided relief for plan participants, qualified beneficiaries, and plan administrators from several applicable deadlines, including the deadlines for providing COBRA notices, making COBRA elections, and paying COBRA premiums. This was intended to help employees and plan administrators deal with the unexpected issues arising with administering benefit plans during the COVID-19 pandemic.
According to the May 2020 notice and related guidance, the period from March 1, 2020, until 60 days after the announced end of the COVID-19 national emergency “or such other date announced” by the government would be disregarded when applying the various COBRA deadlines. This disregarded time period was called the “Outbreak Period.”
As the pandemic marched on, it became clear that the Outbreak Period would likely last significantly longer than first expected. To avoid tripping over the Employee Retirement Income Security Act (ERISA) and Internal Revenue Code 1-year tolling limits on benefit plan deadlines, in February 2021, the IRS and DOL issued new guidance clarifying that the COVID-19 tolling period would be applied, on an individual basis, until the earlier of (1) 1 year from the date an individual was first eligible for the tolling relief or (2) the end of the Outbreak Period. When this relief was announced, this meant that every qualified beneficiary who was subject to a deadline expiring on March 1, 2020, or later would have until the 1-year anniversary of that deadline to take the required COBRA action—whether that was making a COBRA election, premium payment, or notice.
Later in 2021, the IRS (along with the DOL and the U.S. Department of Health and Human Services (HHS)) clarified that the 1-year tolling deadline applied concurrently with COBRA elections and initial premium payments. This meant that qualified beneficiaries would generally have only 1 year of total disregarded time to make COBRA elections and initial COBRA premium payments. In other words, a qualified beneficiary could not wait 1 year to elect COBRA and then wait another year to make a COBRA initial premium payment.
One way to think about these rules is:
If the COBRA election is made by the regular 60-day deadline during the Outbreak Period: The individual has 1 year and 45 days after the date of the COBRA election to make the initial payment (i.e., 1 year plus the 45-day initial payment deadline).
If the COBRA election is made after the regular 60-day deadline during the Outbreak Period: The individual has 1 year and 105 days after the date the COBRA notice was provided to make the initial payment (i.e., 1 year plus the 60-day election period plus the 45-day initial payment deadline).
Think that was complicated? Applying the COVID-19 tolling period for the deadline to make subsequent payments for COBRA coverage required a “rolling” deadline. For that situation, the individual had 1 year and 30 days from the date the payment would originally have been due (i.e., 1 year plus the 30-day payment grace period). This meant that the extended payment deadline might occur well after the month of COBRA coverage to which it related.
Clock Starts Ticking on COBRA Deadlines Again
Since the flurry of relief and guidance in 2020 and 2021, the COVID-19 national emergency has continued to march on and with it the COVID-19 tolling period for COBRA deadlines, subject to the principles explained above. In fact, it was becoming difficult to remember the world where COBRA election and payment mishaps couldn’t be solved by reference to the COVID-19 tolling period.
This all changed on February 10, 2023, when the Biden administration announced its intention to end the COVID-19 national emergency on May 11, 2023. Then, on April 10, 2023, President Biden signed House Joint Resolution 7, which immediately ended the emergency on that date. While the natural conclusion would be that the Outbreak Period would then end on June 9, 2023 (60 days after April 10, 2023—the end of the COVID-19 national emergency), as of this writing the DOL has informally indicated that its intention is still to end the Outbreak Period on July 10, 2023—notwithstanding the earlier end to the COVID-19 national emergency.
Therefore, plan administrators and employers will once again need to apply the normal COBRA timing rules to COBRA election, payment, and notice deadlines, including:
- The 60-day deadline for qualified beneficiaries to elect COBRA coverage
- The 45-day deadline for qualified beneficiaries to make an initial COBRA premium payment (subject to any special plan rule or grace period)
- The 30-day deadline for qualified beneficiaries to make subsequent COBRA premium payments (subject to any special plan rule or grace period)
- The 14-day deadline for plan administrators (or 44 days if the plan administrator is the employer) to provide COBRA election notices to qualified beneficiaries
The impact of the end of the emergency on COVID-19 tolling of COBRA deadlines is best illustrated by the examples below, which assume that the Outbreak Period will end on July 10, 2023.
- COBRA election—election notice provided in July 2022: A qualified beneficiary is provided a COBRA election notice on July 1, 2022. Under normal plan rules, the qualified beneficiary would be required to make a COBRA election by August 30, 2022 (60 days from the date of the notice). Because of COVID-19 tolling, the deadline for the qualified beneficiary to elect COBRA is August 30, 2023, which is the earlier of (1) August 30, 2023 (1 year from August 30, 2022), or (2) September 8, 2023 (60 days after the end of the Outbreak Period).
- COBRA initial premium payment—election notice provided in July 2022: The same facts stated immediately above apply. Assume the qualified beneficiary elects COBRA by August 1, 2022. Under normal plan rules, the qualified beneficiary would be required to make the initial premium payment within 45 days of electing COBRA, which would be September 15, 2022. Because of COVID-19 tolling, the deadline for the qualified beneficiary to make the initial COBRA premium payment would be August 24, 2023, which is the earlier of (1) September 15, 2023 (1 year and 45 days from the date of the election), or (2) August 24, 2023 (45 days after the end of the Outbreak Period).
- COBRA initial premium payment—election notice provided in July 2022: The same facts stated immediately above apply, except that on July 1, 2023, the qualified beneficiary elects retroactive COBRA coverage to the date of the qualifying event. Under normal plan rules, the qualified beneficiary would be required to make the initial premium payment within 45 days of electing COBRA. Because of COVID-19 tolling, the deadline for the qualified beneficiary to make the initial COBRA premium payment would be August 24, 2023, which is the earlier of (1) October 14, 2023 (1 year and 105 days after the notice was provided on July 1, 2022), or (2) August 24, 2023 (45 days after the end of the Outbreak Period).
- COBRA election—election notice provided in July 2023: A qualified beneficiary is provided a COBRA election notice on July 1, 2023. Under normal plan rules, the qualified beneficiary would be required to make a COBRA election by August 30, 2023 (60 days from the date of the notice). Because the qualified beneficiary got in right before COVID-19 tolling ended, the qualified beneficiary has until September 8, 2023, to elect COBRA, which is the earlier of (1) August 30, 2024 (1 year from August 30, 2023), or (2) September 8, 2023 (60 days after the end of the Outbreak Period).
Focus on What You Can Control
It is certain that tricky situations will emerge when applying the prior tolling rules for which employers and plan administrators will not have clear guidance. In addition, given that the 1-year tolling period applies on an individual basis, the deadlines for qualified beneficiaries to make COBRA elections, payments, and notices will not be uniform, even as the Outbreak Period ends. This is certain to pose administrative complexities as we exit this phase of the COVID-19 pandemic.
Although uncertainties remain for plan administrators staring into this new reality, some practical steps can be taken now. Plan administrators should review prior communications sent to qualified beneficiaries regarding the tolling of COBRA election and premium payment periods and provide updated communications to the extent necessary. Given that deadlines are calculated on an individual basis, a general notice describing the end of the COVID-19 pandemic and the impact on COBRA deadlines may be preferable in some situations than a targeted individual communication, as this may avoid calculation foot faults. Administrative processes should also be reviewed and adjusted to account for the end of the tolling requirement to avoid unintentionally extending COBRA deadlines beyond the end of the COVID-19 emergency.
Paul M. Hamburger is co-chair of the Employee Benefits, Executive Compensation, and ERISA Litigation Practice Center and head of the Washington, D.C., office of law firm Proskauer Rose LLP. He is also a leader of the Practice Center’s health and welfare subgroup and a member of Proskauer’s Health Care Reform Task Force. Hamburger has more than 35 years of experience in advising employers and administrators and is the author of numerous articles and publications on COBRA and other employee benefits issues affecting pension and welfare plans. Hamburger is contributing editor of Mandated Health Benefits—The COBRA Guide.
Jennifer Rigterink is senior counsel in the Employee Benefits & Executive Compensation Group in the New Orleans office of law firm Proskauer Rose LLP. She focuses on a diverse array of tax and ERISA issues impacting employee health and welfare benefits, with a special focus on all matters related to family building and reproductive health benefits.