COVID & COBRA: What We Know and What Should Be Expected

April 8, 2020

As everyone is well aware, the current COVID-19 pandemic has caused a tremendous amount of chaos and uncertainly both in business and in our everyday lives. 

In response the economic hardship caused by the virus the US Government passed the Coronavirus Aid, Relief, and Economic Security Act (CARES) to help provide an estimated $2 trillion stimulus package to battle the harmful effects of the COVID-19 pandemic. Although the CARES Act was pushed through Congress as an emergency means to keep businesses and individuals afloat during these unprecedented times, the general consensus is that more legislation and amendments are on the way to further soften the blow caused by the coronavirus outbreak. 

At this time, there have not been any Federally mandated changes to how COBRA is administered, as it was not explicitly addressed in the initial phase of the CARES bill. Some states have already enacted executive orders to defer health insurance premiums or extend grace periods, but it should be emphasized that those State Executive orders apply to small commercial group health plans and individual policies (personal policies) – they do not apply to COBRA (which is a Federal law). Yet, we do expect the Federal Government to address COBRA continuation coverage in the near future as the impact of COVID19 does influence many participants’ ability to pay COBRA premiums. As of the date of this post, however, COBRA participant premium amounts need to remain the same and grace periods will not be extended until there is a legislative change at the federal level, if there comes one at all.
The aforementioned matter could change in the future; we are receiving updates on individual state executive orders in response to Coronavirus as they pertain to the healthcare industry and health plans of insured participants. 

​Although this pandemic is unprecedented in the modern era, amending the COBRA law in the midst of a recession is something that did occur when eligible COBRA premiums were subsidized under the American Recovery and Reinvestment Act of 2009, which was passed in the wake of the 2008 financial crisis. The circumstances in 2009 are vastly different then what they are now, however. In 2009, the employers were essentially responsible for fronting the COBRA premium subsidies for their participants and then the company would get reimbursed by the government at a later date. Considering that many businesses have been unable to generate revenue during the current COVID shut down, it would seem unlikely that most companies would have the financial flexibility to carry out a similarly structured COBRA subsidy plan.

That said, it is not our job to speculate. Our job is to stay on top of the developments that are coming from Washington and being prepared for what comes next. CobraHelp has been working closely with the DOL to make sure we’re staying up to date on any changes that might occur but as you can imagine, even the DOL is learning as they go along, just like the rest of country. Although it ought it out to be noted, even in unprecedented times such as this, one of the great advantages of being one of the very first COBRA TPAs in the U.S. is that for more than 30 years we’ve seen our clients through it all, including the COBRA subsidies of 2009, and we’re confident we’ll be able to quickly adapt and get through any legislative changes that result from this COVID19 fallout.  We can assure you that CobraHelp will take the necessary measures to communicate with our clients and brokers of any changes that might arise and implement those changes as efficiently as possible. For now, though, the administration of COBRA continuation coverage will remain the same.  

Learn more about the new laws impacting national employee benefits administration here

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