Back To The Future: Old Rules, New Challenges for Employers

​The past several years in the world of employee benefits have been unique to say the least. With the pandemic came major changes in the healthcare and employee benefits sectors which impacted everything from administration requirements to financial aspects of these industries. Let's take a look at what the end of COVID19 COBRA tolling means for employers and group health in 2023 and beyond...

The tolling allowed for COBRA timeframes during the COVID19 National Emergency caused "suspension" of typical COBRA deadlines for the past three years. Simply put, COBRA qualified beneficiaries who met certain requirements could pay premiums on a delayed basis, and could elect later than the normal 60-day election period. Employers and Plans were allowed more time to report events, and had special extensions for their administrative duties. Special enrollment rights were also temporarily modified, allowing qualified beneficiaries more time to enroll under qualifying circumstances.

By mid-September 2023, with the previous announcement from the President in April 2023, we saw pre-COVID19 COBRA guidelines return to employee benefits administration. But because it has been several years, many plans are finding it a challenge to go back to the “old timelines”. This is completely understandable as our industry was essentially overhauled for the past three years and "new-old" regulatory compliances standards are understandably a memory jog for many benefits professionals.

In this article we will address some of the pre-COVID COBRA requirements that may have been forgotten during these past several years. Now that all time-lines are “back on track” when it comes to COBRA, Employers and Plan Administrators need to ensure that they are not violating any reporting requirements. Employers should always have a plan for how to ensure COBRA qualified beneficiary notifications, election, payment periods, coverage enrollment, etc are handled in a timely manner. No more “tolling” means stricter deadlines and timelines for each administrative duty. Unfortunately for Employers, Employees and Qualified Beneficiaries alike, missing important deadlines can result in hefty penalties, claims, or lack of coverage altogether.

Notification Requirements. An employer that is subject to COBRA requirements must notify its group health plan administrator within 30 days after an employee has experienced a qualifying event such as employment termination or reduced hours. Within 14 days of that notification, the plan administrator must notify the qualified beneficiary of his or her COBRA rights (not to be confused with a General COBRA Notice aka Initial Rights Notice). 

(This article pertains to Federal COBRA.  See state-specific requirements for state continuation aka “mini cobra” plans).

If the employer is also the plan administrator, and issues COBRA notices directly, the employer has the entire 44-day period in which to issue a COBRA election notice.

Employees also have notification requirements in order to ensure that qualified beneficiaries such as covered spouses and children have opportunity to elect COBRA. For example, the employee must report certain dependent events such as divorce, legal separation or a child’s loss of dependent status within 60 days to the Plan Administrator.
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This is one of many reasons why Initial Notifications (aka General Notice of COBRA Rights) are imperative, as these notices, which must be issued to the employees within 90 days of enrollment into group health benefits, highlight all of the employee’s rights under COBRA, including the requirements and timelines to report certain events.

Election Period. Qualified Beneficiaries must be given an election period of at least 60-days from the later of: the date of notification or the date of the loss of coverage to choose whether to elect continuation coverage under COBRA.

Reporting Enrollment. While employers should always report new COBRA enrollments as soon as possible to the carriers, so as not to delay eligibility processing and coverage activation, employers have 30 days to inform the Plan of a new election.
 
Initial Payment Period. COBRA qualified beneficiaries have 45 days from the date of election to remit the initial premium payment which means coverage activation is often retro-active.

Regular On-Going Premium Payments - 30 Day Grace Period. Enrolled COBRA Participants will then have a minimum of 30 days from each premium coverage period due date to remit premiums for the coverage. For example, premiums due on the 1st of the month must be paid on or before the 30-day grace period. If premiums are not paid timely, this can result in early coverage termination.

Reporting Coverage Terminations for non-payment to Carriers. Each Plan has its own unique rules and plan terms and so it is imperative that employers learn about their group health plan rules for reporting termination timely. Most commonly, COBRA terminations of coverage must be reported within 30 to 60 days of the termination date being requested, depending upon termination reason. Plans should be aware of COBRA regulations as they will need to take into consideration the COBRA rules and timeframes, which exceed the ‘’typical” due dates for premiums and election.

Other Notifications and Requirements. There are a variety of other notifications related to COBRA that must be sent to qualified beneficiaries, and a plethora of other regulatory requirements pertaining to COBRA continuation coverage. This is why a thorough knowledge of COBRA and ERISA requirements or outsourcing to a reliable, expert is key for an Employer’s success in accurate, timely, and ethical benefits administration.

 
Legal Disclaimer:
​The information in this website is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from CobraHelp. or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.