Archived Insight | October 19, 2021

COBRA Guidance Related to the COVID-19 Outbreak Period

The IRS, in coordination with the Departments of Labor (DOL) and Health and Human Services (HHS), published guidance on the application of the COVID-19 Outbreak Period extensions to COBRA election and premium payment deadlines.

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The Outbreak Period began on March 1, 2020, when a National Emergency related to COVID-19 was declared. It will end 60 days after the end of the emergency (or on another date issued by the IRS, DOL and HHS in the future).

For information about the initial guidance on the Outbreak Period’s implications for health and welfare plans, see our May 1, 2020 insight, “Health and Disability Plan Deadlines Extended.”

The guidance

The guidance, Notice 2021-58, states that under the DOL’s Emergency Relief Notices, up to one year must be disregarded in determining the due dates for individuals to elect COBRA continuation coverage and pay COBRA premiums during the Outbreak Period.

Notice 2021-58 clarifies that the disregarded period for an individual to elect COBRA continuation coverage and the disregarded period for the individual to make initial and subsequent COBRA premium payments generally run concurrently.

The Notice provides several examples of this rule, including the following:

  • If an individual elected COBRA coverage within the initial 60-day COBRA election time frame, they will have one year and 45 days after the date of the election to make their initial COBRA premium payment.
  • If an individual elected COBRA coverage outside of the initial 60-day COBRA election time frame, they generally will have one year and 105 days after the date the COBRA notice was provided to make the initial COBRA premium payment.

The Notice also provides limited transition relief for implementation of these rules and addresses the interaction of the Emergency Relief with the COBRA subsidy under the American Rescue Plan Act. For details about the subsidy, refer to our March 1, 2020 insight, “COBRA Subsidy Passes House.”

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This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.