The Internal Revenue Service (IRS) issued Notice 2021-58 providing clarifications on a common question – what exactly is the tolling period (period to disregard or not count) for COBRA election and payment deadlines (called Tolling Relief) under the COVID-19 pandemic national emergency (see the previous Leavitt Group article on the COBRA Tolling Relief rules). As a reminder -the rule is that the deadline for submission of COBRA election and initial payments are delayed until 60 days after the end of the COVID-19 outbreak period or 1-year, whichever occurs first. Extensions of timeframes were afforded for four COBRA timeframes:
- 60-day election period
- Dates for making COBRA premium payments
- Date to notify plan of qualifying event or determination of disability
- Date for providing COBRA election notice for group health plan/administrators
The one-year Tolling Relief period for COBRA elections and initial payments run concurrently, not consecutively. Meaning, a COBRA qualifying beneficiary will generally have one year of disregarded time.
|Elect COBRA (normal 60-day COBRA election period)||Tolling Relief||Tolled Period (for making initial premium payment)||Payment Deadline|
|Outside of||Took advantage||Begins on date COBRA notice provided||1-year + 105 days later||60-day period + usual 45-day period in which to make the initial payment|
|Within||Did not take advantage||Begins on the date of COBRA election||1-year + 45 days||Account for usual 45-day period to make initial payment|
|May not require initial payment before November 1, 2021 if payment made within 1-year + 45-days of COBRA election.|
Other COBRA Tolling Periods to Consider
Monthly COBRA Premiums
- Tolling period of 1-year + normal 30-day grace period
ARPA Subsidized COBRA
- Tolling periods do not apply to election of ARPA subsidized COBRA coverage
- Disregarded periods continue to apply to payments of COBRA premiums after end of ARPA premium assistance period, if still eligible for COBRA and in the Outbreak Period
COBRA Plan Administrator Rights
- Administrator entitled to 1-year tolling period to send COBRA notices
- IRS Notice unclear as to effect of each the Plan administrator and qualified beneficiary
- Likely to afford a longer delay in premium payment deadline since the COBRA notice may be sent a year late under the tolling rule and the qualified beneficiary then sending the premium payment 1-year later (see the table above for rules).
Example 1. COBRA election made more than 60 days after receipt of COBRA election notice under the Emergency Relief Notices.
Facts. Individual A participates in Employer X’s group health plan. On August 1, 2020, Individual A has a qualifying event and receives a COBRA election notice. Individual A elects COBRA continuation coverage on February 1, 2021, retroactive to August 1, 2020. When must Individual A make the initial COBRA premium payment and subsequent monthly COBRA premium payments?
Conclusion. Individual A has until November 14, 2021 to make the initial COBRA premium payment (one year and 105 days after August 1, 2020), because Individual A did not elect COBRA continuation coverage under the Emergency Relief Notices within 60 days after receipt of the election notice. The initial COBRA premium payment would include monthly premium payments for August 2020 through October 2020. The November 2020 monthly COBRA premium payment would be due by December 1, 2021 (one year and 30 days after November 1, 2020), with premium payments due every month after that for the months that Individual A is eligible for COBRA continuation coverage.
Example 2. COBRA election made within 60 days of the receipt of COBRA election notice under the Emergency Relief Notices.
Facts. Individual B participates in Employer Y’s group health plan. Individual B has a qualifying event and receives a COBRA election notice on October 1, 2020. Individual B elects COBRA continuation coverage on October 15, 2020 retroactive to October 1, 2020. When must Individual B make the initial COBRA premium payment and subsequent monthly COBRA premium payments?
Conclusion. Individual B has until November 29, 2021, to make the initial COBRA premium payment (one year and 45 days after October 15, 2020) because Individual A elected COBRA within 60 days of receiving the election notice. The initial COBRA premium payment would include only the monthly premium payment for October 2020. The November 2020 monthly COBRA premium payment would be due by December 1, 2021 (one year and 30 days after November 1, 2020), with premium payments due every month after that for the months Individual B is eligible for COBRA continuation coverage.
Action may be required to remedy any misunderstandings in application of the tolling period. The transition relief was provided to allow additional time should any qualified beneficiaries be under the impression they had more time to elect and/or pay their COBRA premium. Plans and administrators responsible for COBRA administration are encouraged to read this latest Notice as it contains many helpful examples.
DOL Employee Benefits Security Administration (EBSA) April 29, 2020 Final Regulation