In March 2020, the country became rapidly consumed with the COVID-19 healthcare crisis. As new cases began to multiply, the U.S. government formally declared the outbreak a public health emergency. Since that time, Americans have been flooded with significant healthcare and economic concerns as nearly every industry has been affected. Millions of workers have been laid off or furloughed, resulting in the loss of healthcare coverage. This has emphasized the need for COBRA coverage as a short-term solution for those dealing with new job searches in a depressed market who still need to have healthcare coverage for themselves and their family.

 In response to the significant number of layoffs and furloughs and the sharp increase in COBRA participants, Congress has approved special measures to address the loss of employer-sponsored health coverage.  While these new measures are in place from March 2020 until the Outbreak Period ends, that period is now set to expire February 28, causing several important COBRA deadlines to restart.

New COBRA Measures

    Typically, the following COBRA rules apply:

Election period: When a beneficiary experiences a qualifying event (loss of job, reduction in hours, death of covered employee, etc.), they have 60 days to choose whether to elect COBRA coverage.

Premium payments: Plans must allow premium payments to be made in monthly installments, and the first payment is not due until 45 days after COBRA was elected. If a beneficiary does not to pay on time, they can lose coverage. However, premiums are still considered on time if they are made no more than 30 days after the first day of the premium coverage period.

 Notifications: Once a beneficiary has a qualifying event, the employer must notify the plan administrator within 30 days.  Benefit plan administrators then have 14 days to send notices of continuing coverage to the beneficiary. Once a beneficiary has a qualifying event, the employer must notify the plan administrator within 30 days.

However, due to the large number of layoffs and furloughs COVID has produced, plans have been required to disregard the period from March 1, 2020 until 60 days after the announced end of the National Emergency (the “Outbreak Period”) in determining the following periods and dates:

• 60-day election period for COBRA continuation coverage

• COBRA continuation coverage premium payments COBRA continuation coverage premium payments

• Notification date for individuals to tell a health plan of a qualifying event or disability Notification date for individuals to tell a health plan of a qualifying event or disability
• Date for providing a COBRA election notice from group health plan sponsor or administrator

After the Outbreak Period

    COBRA enrollment has dramatically increased over the past 10 months and may continue for the foreseeable future. Overseeing the many stop and start dates, deadlines, payments, notices, and communications for so many individuals creates an enormous compliance burden for COBRA administrators. With the February 28 date rapidly approaching, administrators need to be aware of several scenarios that could play out.

    The Outbreak Period ends and there are no subsidies. One possibility is that Congress will let the period end and without approving any financial assistance to those in need. While this would start the 60-day COBRA clock for payments, elections, and notices, the economy and the job market is still depressed. Millions of people could find themselves without a job, without a way to pay for COBRA premiums, and, therefore, without health insurance.

    The Outbreak Period is extended temporarily. Another possible outcome is that the federal government will approve a temporary extension, giving people who have not been able to find employment more time to keep their healthcare coverage. It could also give Congress additional time to agree on a plan to subsidize COBRA payments. If this happens, it will extend dates for making payments, providing notices, etc.

    The current Outbreak Period ends and Congress approves a new Outbreak Period, with or without subsidies. If this happens, the current Outbreak Period could expire, starting the current 60-day clock for COBRA timelines. Then, new legislation could designate a second Outbreak Period with a new date for starting the 60-day COBRA timeline clock. It could also include COBRA subsidies, either tied to a new timetable or applied retroactively to the previous Outbreak Period.

Legislation for COBRA Subsidies May Be Coming

    COVID-19 has wreaked havoc on Americans, both medically and economically.  In addition to the stress of losing employment and healthcare coverage, many beneficiaries could find themselves wondering how they will pay for the COBRA premiums that have been stacking up during this Outbreak Period.  Many organizations have been urging Congress to offer COBRA subsidies for months.  President Joe Biden has now joined in, calling on Congress to subsidize COBRA premiums in his proposed “American Rescue Plan”. This plan would subsidize COBRA premiums, by way of a 100 percent tax credit, through September 30, 2021. Another current proposal, the “Worker Health Coverage Protection Act”, would subsidize COBRA premiums 85 percent. Under this proposal, employers will be reimbursed through a credit to their payroll tax liability.  These subsidies could allow millions of people to keep their healthcare coverage while searching for new employment.

 Alleviating the Administrative Burden

With COBRA participation spiking as millions of people have lost their employer-based health coverage, COBRA administrators can find the upcoming 60 day window overwhelming, especially as the Outbreak Period draws to a close. Let Comparative Solutions help. Our trusted benefit advisors can provide you with peace of mind in navigating the potential scenarios that could arise over the coming weeks.  From election notices to premium payments and keeping records, we manage the details of COBRA administration, helping you stay on top of all the changes and helping participants maintain access to healthcare coverage.

  Comparative Solutions is a full service TPA proudly based in the Pacific Northwest.  With over a decade of experience working with brokers and employers, we provide Commuter, FSA, HRA, HSA, and COBRA benefits administration, as well as Compliance Administration.  Whatever you're looking for, we've got you covered. Call or email us today, and let us find the right solution for you!