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Volume XI, Number 337

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IRS Clarifies Application of Deadline Extensions to COBRA

The Internal Revenue Service (IRS) recently issued some much-needed guidance surrounding the application of deadline extensions that the IRS and the U.S. Department of Labor (DOL) previously issued for initial elections under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and initial and subsequent premium payments.

On May 4, 2020, the IRS and DOL announced relief which provided that, for a period beginning on March 1, 2020, certain Employee Retirement Income Security Act of 1974 (ERISA) plan deadlines would be paused for up to one year, including deadlines related to COBRA, special enrollment under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and claims and appeals.

In early 2021, the IRS and DOL clarified that the applicable deadlines generally would be paused until the earlier of: (1) 12 months from the date that the deadline otherwise would have started to run, or (2) 60 days after the date the COVID-19 national emergency is declared ended (referred to as the “Outbreak Period”).

This most recent guidance clarifies how the deadline extensions apply to COBRA elections and premium payments. In Notice 2021-58, the IRS states that the deadline extensions for COBRA elections and premium payments run concurrently, so that only a maximum of one year will be disregarded for both the initial election and first payment deadlines. Specifically:

  • “If an individual elected COBRA continuation coverage outside of the initial 60-day COBRA election [period], that individual generally will have one year and 105 days after the date the COBRA notice was provided to make the initial COBRA premium payment.”

  • “If an individual elected COBRA continuation coverage within the initial 60-day COBRA election [period], that individual will have one year and 45 days after the date of the COBRA election to make the initial COBRA premium payment.”

The notice states that “[i]ndividuals must make the initial COBRA election by the earlier of (1) one year and 60 days after the individual’s receipt of the COBRA election notice, or (2) the end of the Outbreak Period.” For each subsequent COBRA premium payment deadline, individuals will have a maximum of one year and 30 days from the original payment due date.

The notice also provides transition relief for plans and participants who assumed that the initial payment deadline suspension ran from the date of the COBRA election rather than concurrently with the election deadline suspension. Individuals may make initial payments by November 1, 2021, even if that date is more than one year and 105 days from the date the individual was first eligible for COBRA. In all cases, individuals must make initial premium payments within one year and 45 days of the date of the COBRA election to continue the coverage.

Also included in Notice 2021-58 are numerous examples showing how the COBRA deadline extensions apply.

© 2021, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.National Law Review, Volume XI, Number 292
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About this Author

Kristine Bingman, of counsel, Portland
Of Counsel

Kristine works with clients on a variety of issues related to health and welfare and retirement plans. Her practice includes advising clients about all aspects of ERISA and Internal Revenue Code compliance as it relates to employee benefit plans, as well as drafting and amending plan documents, and negotiating plan service provider agreements. She advises clients on compliance with health care reform, COBRA, HIPAA, nondiscrimination rules, fiduciary duties, qualified domestic relations orders, reporting and disclosure requirements, Code Section 125 cafeteria plans, and...

503-552-2143
Associate

Hillary Sizer joined Ogletree Deakins’ Chicago office as an associate in 2019. She assists clients with ERISA compliance matters, focusing on health and welfare plans. She graduated in 2019, with distinction, from Georgetown University Law Center where she earned a Master of Laws in Taxation and an Employee Benefits Certificate. She is a 2018 graduate of the Lewis & Clark Law School in Portland, Oregon. While there, she spent a summer externing for the Oregon Tax Court. She received a BA in Philosophy, cum laude...

312-558-3147
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