COVID-19 Tolling of Benefits Presents Challenges for COBRA and Medicare Administration

joint notice issued by the DOL and IRS on May 4, 2020 required group health plans to extend certain timeframes for participants during the COVID-19 “outbreak period” (defined as the period from March 1, 2020 until 60 days after the announced end of the national emergency for COVID-19). 

The Notice requires a tolling of the following COBRA deadlines:

  • The 14-day deadline for plan administrators to furnish COBRA election notices;
  • The 30 or 60-day deadline for an employer or individuals to notify the plan of a qualifying event;
  • The 60-day deadline for participants to elect COBRA;
  • The 45-day deadline for making the initial premium COBRA payment and the 30-day deadline for subsequent COBRA premium payments; and
  • The 60-day deadline for individuals to notify the plan of a determination of disability.

Because of this joint notice, a group health plan must essentially “pause” the above deadlines during the outbreak period. For example, if an individual experienced a COBRA qualifying event on March 1, 2020, the individual would have until 60 days after the end of the outbreak period (rather than 60 days after March 1) to elect COBRA coverage. This is because the joint notice requires a group health plan to pause the 60-day timeframe for COBRA elections during the outbreak period, which is still ongoing. 

The tolling of the time period to elect COBRA coverage may cause some confusion for administrators of group health plans when it comes to the interaction between COBRA and Medicare. Typically, the deadline for qualified beneficiaries to elect COBRA coverage is close to the date when a beneficiary’s coverage ends. Some employers may assume that COBRA coverage has to be offered only in cases where the beneficiary is entitled to Medicare before his or her coverage lapses or a qualifying event occurs. 

However, under the Notice, a beneficiary is permitted to have continuing coverage up until the maximum COBRA period so long as he or she becomes entitled to Medicare before the COBRA election date. Since an election could occur months following a loss of coverage or qualifying event, employers are required to provide COBRA election notices to – and credit the COBRA elections of – beneficiaries who enroll in Medicare following a loss of coverage or qualifying event.

Since the COVID-19 pandemic is ongoing, it is likely that a number of qualified beneficiaries may become entitled to Medicare before they have to make a COBRA election. Under the Notice, these beneficiaries are allowed to elect COBRA coverage for up to the full 18-month continuing coverage period. This means they will be able to “test” their Medicare coverage limits prior to making a decision about COBRA election, which could create an undesirable selection issue for group health plans since it is likely that only beneficiaries who elect COBRA are those with medical needs that are not sufficiently covered by Medicare.

The experienced, responsive team of ERISA attorneys at Hall Benefits Law helps plan administrators understand what regulations and rulings are relevant to them and how best to apply these rulings in practice. Learn more by calling 678-439-6236.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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