DOL/IRS Issue Rule To Extend COBRA Election Deadlines And New Model COBRA Forms

(May 18, 2020)

As the result of the National Emergency from the COVID-19 outbreak, the Department of Labor (DOL) and the IRS determined that participants and beneficiaries covered by group health plans, disability or other employee welfare benefit plans might encounter problems in exercising portability and continuation rights, and in filing and perfecting benefits claims. As a result, the agencies have issued several documents to alleviate some of these difficulties.

On May 4, 2020, the DOL and IRS issued a Joint Rule to extend certain time frames under ERISA and the Internal Revenue Code (IRC) for group health plans, disability and other welfare and pension plans. Pursuant to the Rule, those plans subject to ERISA or the IRC must disregard the period from March 1, 2020 until 60 days after the announced end of the National Emergency as the result of the COVID-19 outbreak, referred to in the Rule as the “Outbreak Period.” (As used in the Joint Rule, “National Emergency” refers to the Presidential Proclamation issued on March 13 declaring that a national emergency existed nationwide as of March 1, 2020 due to the COVID-19 outbreak.)

The Joint Rule provides that this relief applies in determining such deadlines as:

  • The 30-day period allowed for special enrollments under HIPAA (ERISA Section 701(f), (or 60 days under CHIPRA);
  • The 60-day election period for COBRA continuation coverage;
  • The date for making COBRA premium payments;
  • The date for individuals to notify the plan of a qualifying event or determination of disability; and
  • The dates by which claimants may file appeals, request external review, or file information to perfect a request for an external review of an adverse benefit determination.

This also means that the “Outbreak Period” is disregarded for purposes of determining the timeliness of monthly COBRA premium payments.

In addition, the Rule provides that the Outbreak Period shall be disregarded by group health plans, their sponsors, and administrators, when determining the date for providing a COBRA election notice under ERISA Section 606(c).

The Rule provides several examples of how disregarding the “Outbreak Period” would impact these deadlines, such as the situation where an employee has a qualifying event due to the COVID-19 emergency as the result of a reduction of hours below what is necessary to meet the group health plan eligibly requirements. If that employee is provided a COBRA election notice on April 1, 2020, what is the deadline for the employee to elect COBRA? Under the example, the due date will be 60 days after the announced end of the pandemic National Emergency (or such other date as announced by the DOL/IRS at a later time) – which is, at this time, an undetermined date. In the Rule, the agencies used a hypothetical end date of June 29, 2020 which would make the COBRA election notice due on August 28, 2020.

Employers who sponsor group health plans and other covered plans should confer with plan administrators and legal counsel to ensure any notices and deadlines are modified in accordance with the Rule.

In addition to the Rule and related guidance, the DOL issued new Model COBRA forms on May 1, 2020. The new forms are available at laws/cobra.

In a related publication, on April 28, 2020, the Employee Benefits Security Administration issued “COVID-19 FAQs for Participants and Beneficiaries.”

Like so many rules and guidelines issued and implemented in response to the COVID-19 pandemic, this most recent DOL/IRS Joint Rule likely raises more questions than it answers. Clients with questions about the above or related issues are encouraged to contact Mary Moffatt at [email protected] or your Wimberly Lawson attorney.