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cobra timeline extension

COBRA Timeline Extension – Notice 2021-58

The Department of Labor (DOL), the Department of the Treasury (Treasury Department), and the Internal Revenue Service (IRS) issued Notice 2021-58 which addresses the extensions for the election of COBRA and the payment of COBRA premiums.

The previous Joint Notice issued in May 2020 extended timeframes by requiring that plans subject to ERISA or the Code disregard the period for specific action from March 1, 2020, until 60 days after end of the National Emergency or such other date announced by the Agencies in a future notification (the Outbreak Period), subject to a maximum disregarded one year.

Note – As of the date of this broker alert, the National Emergency is still in effect, and an “Outbreak Period” has not started.

Notice 2021-01 was issued in February of 2021 and clarified that the disregarded periods apply from the date each individual or plan was first eligible for relief under the Joint Notice. The applicable periods are disregarded until the earlier of one year from the date the individuals and plans were first eligible for relief or 60 days after the announced end of the National Emergency.

Under Notice 2021-58, the following rules explain the timeframes that apply to individuals making initial COBRA premium payments under the Emergency Relief Notices:

  • Suppose an individual elected COBRA continuation coverage outside of the initial 60-day COBRA election timeframe. In that case, that individual generally will have one year and 105 days after the date the COBRA notice was provided to make the initial COBRA premium payment.

Example: COBRA election made more than 60 days after receiving COBRA election notice under the Emergency Relief Notices.

Facts: Mark participates in Employer X’s group health plan. On August 1, 2020, Mark had a qualifying event and received a COBRA election notice. Mark elects COBRA continuation coverage on February 1, 2021, retroactive to August 1, 2020. When must Mark make the initial COBRA premium payment and subsequent monthly COBRA premium payments?

Answer: Mark has until November 14, 2021, to make the initial COBRA premium payment (one year and 105 days after August 1, 2020) because Mark did not elect COBRA continuation coverage under the Emergency Relief Notices within 60 days after receipt of the election notice. The initial COBRA premium payment would include monthly premium payments for August 2020 through October 2020. The November 2020 monthly COBRA premium payment would be due by December 1, 2021 (one year and 30 days after November 1, 2020), with premium payments due every month after that for the months that Mark is eligible for COBRA continuation coverage.

  • Suppose an individual elected COBRA continuation coverage within the initial 60-day COBRA election timeframe. In that case, that individual will have one year and 45 days after the date of the COBRA election to make the initial COBRA premium payment.

Example: COBRA election made within 60 days of receiving COBRA election notice under the Emergency Relief Notices.

Facts: Sara participates in Employer Y’s group health plan. Sara has a qualifying event and receives a COBRA election notice on October 1, 2020. Sara elects COBRA continuation coverage on October 15, 2020, retroactive to October 1, 2020. When must Sara make the initial COBRA premium payment and subsequent monthly COBRA premium payments?

Answer: Sara has until November 29, 2021, to make the initial COBRA premium payment (one year and 45 days after October 15, 2020) because of Sara elected COBRA within 60 days of receiving the election notice. The initial COBRA premium payment would include only the monthly premium payment for October 2020. The November 2020 monthly COBRA premium payment would be due by December 1, 2021 (one year and 30 days after November 1, 2020), with premium payments due every month after that for the months Sara is eligible for COBRA continuation coverage.

Also included in the Notice are examples relating to timeframes for electing COBRA, failure to make payments on time, and failure to elect COBRA under ARPA.

A copy of Notice 2021-58 can be found https://www.irs.gov/pub/irs-drop/n-21-58.pdf.

Cosmo Insurance Agency is a full-service independent insurance agency based in Hackensack (Bergen County) and Lakewood (Ocean County), New Jersey that offers an all-encompassing range of insurance options for both individuals and businesses. Cosmo keeps its promise to assure an efficient and creative approach to the services we offer. Each of our clients experience a personalized and long-term relationship with us. Our New Jersey based team of health brokers guides our clients in helping them choose the most cost-effective options. By incorporating our knowledge of the insurance guidelines for healthcare, employee benefits, life insurance, self-insurance, dental, disability, and long term care insurance, we keep our clients up-to-date with affordable plans that cover all their specific insurance needs.

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2024