The COBRA subsidies under the American Rescue Plan Act (ARPA) have ended and employers should have prepared and provided timely notice to Assistance Eligible Individuals (AEIs) concerning the expiration of any subsidies they have received to ensure that those who wish to maintain their COBRA continuation coverage beyond the subsidy period are able to do so.
While COBRA subsidies have ended, employers must remain mindful that the extended COBRA deadlines established as a result of the “National Emergency” to help plans, participants and third-party service providers impacted by the COVID-19 pandemic by postponing various employee benefit plan deadlines during a defined “Outbreak Period” are still in effect.
What is the Outbreak Period?
The “Outbreak Period” established extended timeframes for plan administrators and participants and beneficiaries to comply with the various components of COBRA administration, including notification, election and premium payment requirements. The “Outbreak Period” initially began on March 1, 2020, and it was to last until 60 days after the announced end of the “National Emergency”, but under federal law, the period of relief cannot exceed one year. Because the “National Emergency” has yet to be declared over, the one-year extension became applicable, placing the deadline for relief to expire on February 28, 2021. With the pandemic still ongoing as of February 28, and relief still being necessary, the U.S. Department of Labor (DOL) had to determine how to work around the law related to the one-year period for relief.
What is the Impact of the Feb. 26 Guidance on the Outbreak Period?
Recall that in anticipation of the impending relief expiration date, on February 26, 2021, the DOL’s Employee Benefits Security Administration (EBSA) issued Disaster Relief Notice 2021-01 to provide guidance on the duration of COVID-19-related relief for certain employee benefit plan deadlines during the “Outbreak Period.” The guidance was provided to resolve the issue with the expiration of the one-year period. In the guidance, the DOL affirmed its interpretation of the Employee Retirement Income Security Act (ERISA) limitation that the notice periods can be disregarded until the earlier of:
- One year from the date the participant was first eligible for the relief; or
- 60 days after the announced end of the “National Emergency.”
The guidance further stated, “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 one year.”
This phrasing suggested that plan sponsors must apply relief on a participant-by-participant basis, and the guidance provided some examples of how this would work:
- “If a qualified beneficiary would have been required to make a COBRA election by March 1, 2020, the Notice delays that requirement until February 28, 2021, which is the earlier of one 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 one year from that date (i.e., March 1, 2022) or the end of the Outbreak Period.”
Based on the offered examples, there may be participants and/or beneficiaries who are still eligible for COBRA relief as determined by their initial COBRA eligibility date.
Remind Me, What Were the Extended Deadlines Established by the Outbreak Period?
The COBRA deadlines that have been extended until after the “Outbreak Period” ends include:
- The 30 or 60-day deadline for employers or individuals to notify the plan of a qualifying event;
- The 60-day deadline for individuals to notify the plan of a determination of disability;
- The 60-day deadline for participants to elect COBRA; and
- The 45-day deadline to make a first premium payment and 30-day deadline for subsequent premium payments.
In addition, the “Outbreak Period” is disregarded when determining the date an employer must send a COBRA election notice to individuals whose coverage is ending, which provides some relief to those employers whose operations may still be shut down. A separate Disaster Relief Notice included deadline extensions for notices and disclosures required under ERISA which provided relief for plan sponsors on certain notice requirements. This DOL guidance provides that plan sponsor relief also expires after a one year period from the date of the relief.
Why Does Any of This Matter?
Employers must not lose sight of the “Outbreak Period” as relief timeframes will vary among eligible participants. Providing proper and timely notice to participants regarding their relief period is necessary to ensure plan administrators or other responsible plan fiduciaries are not exposing a participant or beneficiary to a risk of losing protections, benefits, or rights under the plan. As such, the administrator or other fiduciary should consider affirmatively sending a notice regarding the end of the relief period.
Next Steps for Employers
Because participants and beneficiaries may encounter ongoing problems due to the COVID-19 pandemic, plan administrators should continue to make reasonable accommodations to prevent the loss of or undue delay in payment of benefits. In addition, plan disclosures issued prior to or during the pandemic may need to be reissued or amended if those disclosures failed to provide accurate information regarding the time in which participants and beneficiaries were required to act, such as COBRA election notices and claims procedure notices.