Devine Millimet | NH Law Firm


Patricia M. McGrath, Esq.

May 8, 2020

The Internal Revenue Service, in tandem with the federal Department of Labor, have issued new rules providing extensions of time for compliance with certain COBRA provisions during the present COVID-19 National Emergency (the “New Rules”).

In addition, the DOL issued “Disaster Relief Notice 2020-01” which sets out the DOL’s observations about the CARES Act provisions for COVID-19 retirement plan loans and distributions.  Finally, the DOL also chose this time to issue updated sample COBRA Notices for use by covered employees.

Taken together, these publications urge employers to sit up and take notice regarding their COBRA practices as well as their retirement plan administration.

This e-alert will only address the New Rules.  The link to the New Rules is  We will follow up shortly with commentary on the additional guidance.

Present COBRA rules

Employers that sponsor a group health plan and that employ 20 or more employees are subject to the continuation coverage rules of COBRA.  Under those rules, when a covered employee loses coverage on account of a “qualifying event” – for example, a reduction in hours, or termination of employment - then the employer must offer that employee the option to continue group coverage, at the employee’s expense, for a set period of time.  While there are other options for coverage, affected employers must still comply with the COBRA rules.

COBRA lays out various deadlines by which the employer and employee must act, in order for the employee to be able to elect continuing group coverage.  The employer has 30 days to notify the plan administrator of a qualifying event.  After that, the plan is given 14 days to send its notice of COBRA eligibility to the employee (“Notification Window”).  Then, the employee has 60 days to decide whether to elect COBRA coverage (“Election Window”).  If the employee chooses coverage, the employee then must pay the premium amount due within the next 45 days.  Thereafter, the covered employee must pay each monthly premium within 30 days of each due date if they want to remain on the group plan.  While these details sound complicated, plan administrators can likely recite these details in their sleep.

The New Rules

The New Rules provide an extension of time for affected employees to take the necessary steps to elect or maintain their group health coverage.  While the guidance is favorable to employees who are deciding whether to elect COBRA coverage, the extensions of each of these deadlines may also create additional work, and certainly require additional vigilance, on the part of employers.

The New Rules explain the calculation of their extensions of deadlines starting with March 1, 2020.  That is the effective date that the President declared a National Emergency because of the COVID-19 outbreak.  Next, the New Rules coin the term “Outbreak Period.”  That is the timeframe, beginning on March 1, which runs through to 60 days after the announcement that the National Emergency is ended.  That end-date is a moving target, since the National Emergency is still in effect.

The New Rules direct COBRA-affected employers and individuals to “disregard” the “Outbreak Period” when calculating notice, election and payment deadlines.  In other words, affected employees and employers have much more time at every step of the COBRA process to complete required steps.

The New Rules provide examples.

In order to provide clear explanations, the New Rules assume that the National Emergency ends on April 30, so that the Outbreak Period, which started on March 1, hypothetically ends on June 29 (60 days after the hypothetical end of the National Emergency on April 30).  For example, if a person who is eligible for COBRA receives the eligibility notice on April 1 (during the Outbreak Period), that person may take until August 28 (the 60-day Election Window) to decide to elect COBRA or not.  That is because the Outbreak Period does not count when starting the Election Window clock.  Then, the usual 60-day Election Window period picks up on June 29, and runs until August 28.  If that employee elects COBRA, then that employee may take up to 45 days after the date of election to make the first premium payment.  It is possible then, for an employee to pay, in mid-October, the first premium payment for coverage that began on April 1.

The COBRA extension under the New Rules is also applicable to employers.  Say, for example, an employer reduces an employee’s hours as of April 1.  That employer plan would usually be required to send out a COBRA notice promptly after that date, and no later than the end of the Notification Window.  Now, that employer  has several months longer to send that notice  - 60 days beyond the end of the Outbreak Period - and still remain complaint with COBRA rules.

Does the employer need to maintain that COBRA-eligible person on the plan during these extended waiting periods?  No.  Many employers discontinue coverage for affected employees who are considering whether to elect COBRA coverage.  Then, when the employee elects COBRA, the employee is reinstated retroactively.

To be clear, the New Rules extend the maximum time for issuing COBRA notices and for other COBRA decision-making steps.  Employers and employees can (and should) still act as promptly as possible when dealing with COBRA requirements.

Now more than ever, employers must maintain excellent records regarding their COBRA administration.  For those employers who use outside administrators for COBRA management, this is the time to contact that COBRA manager, to confirm their new procedures on account of the New Rules.  Violation of COBRA rules can carry a hefty penalty.  Unfortunately, the goodwill and concern that likely triggered the New Rules may create an unwelcome burden for employers.

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