How Are Employers’ COBRA Obligations Impacted By the Official End to the COVID-19 National Emergency?

By Meaghan E. Murphy - Skoler Abbott

May 1, 2023

On March 13, 2020, a COVID-19 National Emergency was declared by then-President Trump. Thereafter, many federal agencies made changes to the procedures associated with the laws they enforce to accommodate individuals and businesses trying to navigate those unchartered waters. For example, the U.S. Department of Labor (DOL) and Internal Revenue Service (IRS) issued a notice extending certain time periods affecting COBRA rights. Those extended time periods were described as temporary, with the duration tied to that of the National Emergency.

In January 2023, President Biden announced his intention to end the National Emergency by May 11, 2023. It is possible that the National Emergency ends even sooner, as Congress has taken action to do just that, but it is unclear at this time if that will happen. Whether the National Emergency ends on May 11, 2023 or earlier, employers need to know what to do to comply with their COBRA obligations when that happens.

The Basics of COBRA Continuation Coverage

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), which applies to employers with 20 or more employees, affords employees the right to continue employer-provided group health insurance upon loss of coverage due to a qualifying event. Qualifying events include termination (except for gross misconduct) and reduction in hours necessary for eligibility, both of which became unfortunately common occurrences as a result of the COVID-19 pandemic.

COBRA continuation coverage must be identical to the group health plan coverage that was lost; it must provide the same benefits, choices, and services. Generally, the duration of the continuation coverage is limited to either 18 or 36 months, depending on the nature of the qualifying event, but extensions of the coverage are available in limited circumstances.

COBRA coverage can be terminated early for certain reasons, including the following:

• Failure to timely pay premiums (generally, after a 30-day grace period for each payment);
• Plan cancellation;
• Availability of alternative group coverage;
• Entitlement to Medicare; and
• Fraud or other misconduct.

The law requires employers to give plan participants notice of their COBRA rights at the outset of coverage (i.e., when they first join the group health insurance plan) and again upon any qualifying event, which is called an election notice. The election notice, which must include certain relevant information, must be provided to employees within 14 days of a qualifying event. Employees then have 60 days to elect COBRA continuation coverage. The U.S. Department of Labor has issued COBRA model notices for employers to use, and use of those model notices – when properly completed with correct information – are considered to be good faith compliance with COBRA notice requirements.

COVID-19-Related Changes to COBRA Requirements

As mentioned above, a few months after President Trump declared the National Emergency in 2020, the U.S. Department of Labor and the Internal Revenue Service issued a joint notice extending certain time periods that affect COBRA rights (Joint Notice). The Joint Notice required plans to disregard the period from March 1, 2020 until 60 days after the end of the National Emergency is announced (which was deemed the “Outbreak Period”). With the Outbreak Period coming to an end on May 11, 2023 (or possibly even earlier), the extended deadlines will also come to an end.

Under the Joint Notice, if an election notice was received by an employee after March 1, 2020, the employee has until 60 days after the Outbreak Period to timely elect COBRA continuation coverage. Upon timely election, the COBRA coverage dates back to the original date group coverage was lost due to the qualifying event. As a result, if the Outbreak Period ends on May 11, 2023, employees who received an election notice during that period – between March 1, 2020 and May 11, 2023 – will have until July 10, 2023 to elect coverage. Thereafter, the deadline will revert back to the ordinary 60-day deadline.

Under the Joint Notice, deadlines to pay premiums were also extended to 30 days after the Outbreak Period for those who elected COBRA. That means that, during the Outbreak Period, COBRA coverage could not be terminated and claims could not be denied for non-payment of premiums. So if the Outbreak Period ends on May 11, 2023, employees will have until June 10, 2023, to pay any unpaid premiums for that period. Thereafter, employers will again be entitled to terminate COBRA coverage for failure to timely pay premiums, provided they give a 30-day grace period for each payment.

Finally, the Joint Notice provided that the deadline for individuals to notify plans of a qualifying event or disability determination was extended to 60 days after the Outbreak Period, and that the Outbreak Period was also to be disregarded for purposes of claim filing, appeal filing, and related deadlines. When the Outbreak Period comes to an end, those deadline extensions will come to an end too.

Employer Takeaways

Further guidance is expected as to the return of regular deadlines. For now, employers should determine whether and how the upcoming end of the Outbreak Period will impact any of their employees or former employees, communicate with their health insurance plan providers about the expected changes, and keep an eye out for further information. Contact the experienced attorneys at Skoler, Abbott & Presser with any questions.

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