Because of the disruption wrought by COVID-19, certain federal agencies established the Emergency Relief Period to provide employers and individuals with extra time in which to take certain COBRA-related actions. Recently, the IRS issued guidance to clarify the way in which the Emergency Relief Period applies to the deadline for making an initial COBRA premium payment. The guidance also provides transition relief, allowing certain individuals to make their first COBRA premium payment later than the otherwise-applicable deadline, so long as the payment is made on or before November 1, 2021. The guidance is important to COBRA administrators—including employers who administer COBRA for their own group health plans—and to individuals who have not yet made their first COBRA premium payment. This alert provides a brief summary of the IRS guidance.
When Does the Emergency Relief Period Begin and End? The Emergency Relief Period is calculated separately for each affected individual. For a given individual:
- The Emergency Relief Period begins on March 1, 2020, or on the date of the original COBRA deadline, whichever is later.
- The Emergency Relief Period ends one year after it begins, or 60 days after the announced end of the national emergency, whichever is earlier.
How Does the Emergency Relief Period Affect COBRA Deadlines? The Emergency Relief Period is disregarded when calculating the following COBRA deadlines:
- The date by which a plan sponsor must provide a COBRA election notice;
- The date by which an individual must elect COBRA continuation coverage (60 days after receiving a COBRA election notice);
- The date by which the initial and subsequent COBRA premium payments must be made (the initial COBRA premium payment is due 45 days after the individual elects COBRA, subsequent payments are due monthly thereafter); and
- The date by which an individual must notify the plan of a COBRA qualifying event that is a divorce, a legal separation, a dependent child ceasing to qualify as such, or a disability.
Electing and Paying for COBRA. Because the Emergency Relief Period applies both to the deadline for electing COBRA and to the deadline for making COBRA premium payments, some individuals believed that they could take one year and 60 days to elect COBRA and then could take another year and 45 days to make their initial COBRA premium payment. In new guidance, the IRS explained that this belief was mistaken. The Emergency Relief Periods for electing and paying do not run consecutively—they run concurrently.
In practical terms, the fact that the Emergency Relief Periods run concurrently means this:
- Individuals who received a COBRA election notice and made their COBRA election within 60 days: initial COBRA premium payment is due no later than one year and 45 days after the date of the COBRA election; and
- Individuals who received a COBRA election notice and made their COBRA election more than 60 days later: initial COBRA premium payment is due no later than one year and 105 days after the date they received the COBRA election notice.
Note that these are general rules which will not apply in all instances. For example, the time periods above will be shortened for some individuals once the end of the national emergency has been announced.
Transition Relief. Under the IRS guidance, an individual is eligible for transition relief if (i) the individual elected COBRA on or after September 17, 2020; and (ii) after disregarding the Emergency Relief Period, the individual's COBRA election was timely. Individuals who are eligible for transition relief have until November 1, 2021, to make their initial COBRA premium payment.
COBRA Premium Assistance under the American Rescue Plan Act (ARPA). The federal government's subsidy of COBRA premiums ended on September 30, 2021. The IRS reiterated its previous guidance that the Emergency Relief Period does not apply to the deadline for individuals to elect premium assistance under ARPA.
Questions? If you have questions or concerns regarding this client alert, please contact the authors, any member of Venable's Employee Benefits and Executive Compensation Group, or your regular Venable lawyer.