IRS Clarifies Extension of Certain COBRA Election and Premium Payments Deadlines
October 12, 2021
On October 6, 2021, the IRS issued Notice 2021-58, clarifying the application of the extensions of timeframes related to COBRA. As a reminder, the extension of certain timeframes for employee benefit plans, participants, and beneficiaries required plans to disregard the period from March 1, 2020, until 60 days after the end of the National Emergency (known as the “Outbreak Period”) for certain deadlines, including the deadlines applicable to COBRA notices and payment. Subsequent guidance clarified that the relief is available from the earlier of a) one year from the date an individual or plan is first eligible for relief or b) the end of the outbreak period.
Notice 2021-58 clarifies that the disregarded period for an individual to elect COBRA continuation coverage and the disregarded period for the individual to make initial and subsequent COBRA premium payments generally run concurrently. This means that individuals who take advantage of the extension of certain timeframes by electing COBRA continuation coverage outside of their initial 60-day COBRA election timeframe will have one year and 105 days after the date the COBRA notices was provided to make the initial COBRA premium payment. (The 105 days represents the number of days until the first payment must be made under normal COBRA rules – an initial 60 days to make an initial COBRA election plus the 45 days to make the initial COBRA premium payment.)
Alternatively, individuals who make their COBRA election within their initial 60-day COBRA election period will have one year and 45 days to make the initial COBRA premium payment.
However, the notice also provides additional relief stating that initial COBRA premium payments will not be due before November 1, 2021, as long as the individual makes their initial COBRA premium payment within one year and 45 days after their election date. They provided this relief because some individuals might not have realized that the disregarded period to make a COBRA election and the disregarded period to make an initial COBRA premium payment run concurrently. In order to avoid inequitable outcomes, in no event will an individual be required to make the initial COBRA premium payment before November 1, 2021, even if November 1, 2021, is more than one year and 105 days after the date the election notice was received.
The notice also discusses the interaction of the extension of certain timeframes with the COBRA premium assistance provided under the American Rescue Plan Act (ARPA). Specifically, the extension of certain timeframes did not provide additional time for individuals to elect ARPA extended coverage. However, individuals will still be able to access the extension of timeframes relief to pay for any COBRA coverage that they receive after the ARPA COBRA premium assistance ends.
The notice goes on to provide a number of examples of how this guidance applies. Employers should review this notice to understand the relief it provides to individuals who will elect COBRA through the end of the outbreak period.
Notice 2021-58 »