COBRA Disaster Relief in 2021: DOL New Guidance

Back in April of 2020, the U.S. Department of Labor, in conjunction with the Department of Treasury and the IRS, issued a Joint Final Rule that went into effect as March 1, 2020 – which was declared the start of the National Emergency due to the COVID-19 pandemic. ​

DOL Issues New Guidance on COBRA Outbreak Period Extensions and Time Frames
**Updated 03/04/21**
The Joint Final Rule extended certain group plan and COBRA deadlines, such as enrollment periods, payment grace periods, claims for benefits, and appeals of denied claims, among other things. The guidelines set forth by the Joint Final Rule extended these health plan deadlines until 60 days after the National Emergency, or “Outbreak Period”, is deemed over. However, in the case of a National Emergency, federal law allows regulatory agencies to suspend statutory requirements for up to 12 months. When the final rule was issued, it was not anticipated that the National Emergency would still be in place more than a year later. As we have now surpassed the end of the 12 months from the beginning of the relief period, many questions have been raised about when statutory deadlines, such as the COBRA election 60-day election period, would revert to normal timeframes.

In response to these circulating questions and inquiries, the DOL has recently issued the Disaster Relief Notice 2021-01 which sets forth the DOL and IRS’ position that the COVID-19 extensions will continue past February 28th, and that all such extensions must be measured on a person-by-person basis – which was not clear from the prior guidance.  To put it more simply, if during the National Emergency a participant or plan sponsor is subject to a statutory deadline for a notice or disclosure subject to these rules, that deadline is delayed for up to 12 months from the original deadline, or until the end of the Outbreak Period, whichever is sooner. This period is referred to as the “Disregarded Period.” This interpretation means that a participant’s deadline for something like a COBRA election is unique to that participant and is based on the original deadline that would have applied absent the National Emergency. That said, in no case will a requirement be delayed for any individual by more than one year. The DOL states the Disregarded Period, or Tolling Period, ends the earlier of:

1. One year from the date the deadline would have begun running for that individual; or
2. 60 days from the end of the National Emergency (which is still ongoing).

Individuals and plans with timeframes that are subject to the relief under the Notices will have the applicable periods under the Notices disregarded until the earlier of (a) 1 year from the date they were first eligible for relief, or (b) 60 days after the announced end of the National Emergency (the end of the Outbreak Period).  On the applicable date, the timeframes for individuals and plans with periods that were previously disregarded under the Notices will resume.  In no case will a disregarded period exceed 1 year.  [Emphasis added] 

In the Disaster Relief Notice 2021-01 the DOL provides a few examples of how this interpretation would apply to such things as a COBRA election or an employer required notice or disclosure. The examples that DOL provided are as follows: 

DOL Examples

• If a qualified beneficiary would have been required to make a COBRA election by March 1, 2020, the Joint Notice delays that requirement until February 28, 2021, which is the earlier of 1 year from March 1, 2020 or the end of the Outbreak Period (which remains ongoing).
• If a qualified beneficiary would have been required to make a COBRA election by March 1, 2021, the Joint Notice delays that election requirement until the earlier of 1 year from that date (i.e., March 1, 2022) or the end of the Outbreak Period.
• If a plan (or employer/plan sponsor) would have been required to furnish a notice or disclosure by March 1, 2020, the relief under the Notices would end with respect to that notice or disclosure on February 28, 2021. The responsible plan fiduciary would be required to ensure that the notice or disclosure was furnished on or before March 1, 2021.

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​Conclusion
The DOL may announce the end of the Outbreak Period at any time and, subsequently, issue a new extension. However, as of the date of this posting, there is no information of any intention of the DOL or IRS to issue any new timeframe extensions. The verdict to extend relief periods on a participant-by-participant basis may be beneficial to some participants but it will also create compliance and administrative challenges for employers and TPAs. Plan sponsors and administrators should be aware of the imminent end to the relief provided under the IRS/DOL Joint Notice and start planning to rollback processes to the applicable regular time frames effective March 1, 2021.

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