by Andy Lavin
on October 9, 2020
In May, the Department of Labor and Internal Revenue Service issued relief for those entitled to COBRA coverage. This relief was in response to the COVID-19 National Emergency. The duration of these relief provisions has not yet been determined and depends on the federal government’s establishment of an end date. NBS developed a response after consulting with legal counsel, industry colleagues, and insurance carrier representatives and has been in contact with COBRA plan sponsors on a case-by-case basis as they have had covered individuals take advantage of the relief provisions. Although the number of individuals that have requested relief under these provisions has been rather small, the numbers continue to build as time goes on.
The relief provisions are briefly outlined in this blog piece, but readers are encouraged to access the detailed documents referenced below for a more thorough treatment of them as well as more information about how NBS is administering them. The official DOL & IRS relief announcement can be found here.
Relief for Qualifying Beneficiaries
Qualified Beneficiaries normally have 60 days from the date of their Qualifying Event Notice to elect COBRA coverage. The DOL’s relief instructs plan sponsors and administrators to extend this period by not counting days included in the National Emergency. In effect, this gives an open-ended election period until such time as the National Emergency is declared over.
Relief for COBRA Enrollees
The DOL’s relief provisions extend the grace period for premium payments. Like the relief for QB’s above, days included in the National Emergency are not to be counted toward the 30-day grace period typically allowed for COBRA premium payments. In effect, this gives an open-ended grace period until such time as the National Emergency is declared over.
Continued COBRA coverage while an individual defers premium payments under this provision places a burden of financial responsibility on plan sponsors who will likely be required by carriers to continue funding their premiums. NBS has taken a position that minimizes that risk by requiring individuals who seek relief under this provision to return a signed form indicating that they acknowledge that premium payments are deferred rather than forgiven and that non-payment of a premium by the eventual grace period end date will result in retroactive termination.
Relief for Employers and Plan Administrators
Finally, the DOL’s relief provisions also extend the length of time allowed for the employer and plan administrator to provide qualified beneficiaries with a COBRA election notice. Similarly to the provisions above, the National Emergency period is disregarded with respect to the number of days allowed to send the election notice. While NBS recognizes this piece of relief, it has not been our experience that our employers have been unable to provide termination information to us withing the normal timeframes, and NBS has also continued to process election notices within the normal time otherwise allowed. In order to prevent unnecessary confusion and inconvenience to qualified beneficiaries, carriers, and administrators, NBS recommends that employers continue to provide termination data in a timely manner unless extraordinary circumstances prevent it.
Qualified Beneficiary Communication
Since May, all Qualifying Event Notices and COBRA coupon books have had a supplementary document included which explains the DOL’s COBRA relief provisions. That document is also accessible on NBS’s website here. Additionally, COBRA participants terminated from coverage for non-payment after March 1st receive a form along with their termination notice. The form explains the extended grace period deadlines and allows them to request reinstatement of all or some of their coverages without immediate payment. This form also accompanies all underpayment notices. For reference, that form may be accessed here. We recommend our COBRA client employers and brokers read through each of these two documents which provide more detail on the relief provisions briefly described in this post.