In response to COVID-19, the IRS has issued additional relief guidance addressing the deadlines for COBRA election notices and premium payments (Notice 2021-58 (Oct. 6, 2021)). The notice clarifies how earlier pieces of COVID-19-related guidance interact with one another and includes additional transition relief involving COBRA premium payments. The notice also addresses how COBRA-related relief guidance interacts with COBRA premium assistance provisions under the American Rescue Plan Act of 2021 (ARPA-21), as implemented. The IRS coordinated with the Departments of Labor (DOL) and Health and Human Services (HHS) (collectively, Departments) in developing the notice, and DOL and HHS concurred with the notice.

As background, in May 2020 the Departments extended the timeframes for certain benefits-related compliance deadlines (including select COBRA-related requirements) by requiring health plans subject to ERISA and the Code to disregard the period for those actions from March 1, 2020, until 60 days after the announced end of the COVID-19 emergency (85 Fed. Reg. 26351 (May 4, 2020); see Legal Update, Agencies Extend Benefit Plan Compliance Deadlines Due to COVID-19). Referred to as the outbreak period, this disregarded time was subject to a maximum set-aside period of one year.

The outbreak period guidance provides relief for the following COBRA requirements:

Under additional guidance issued in February 2021, the Departments clarified that these disregarded time periods apply from the date that each individual or plan was first eligible for relief under the Departments' outbreak period guidance (EBSA Disaster Relief Notice 2021-01 (Feb. 26, 2021)). As a result, time periods under the outbreak period and February 2021 guidance are disregarded until the earlier of:

Under the February 2021 guidance, an individual's ultimate compliance deadline is keyed to when the individual first becomes eligible for the one-year set-aside period. For example, if—absent the relief under the Departments' earlier guidance—a COBRA qualified beneficiary would have been required to make a COBRA election by:

Once an individual's or plan's disregarded time expires, the otherwise applicable timeframes resume.

Notice 2021-58 provides that the disregarded periods for an individual to elect COBRA and make initial and subsequent COBRA premium payments (that is, under the outbreak period rules) generally run concurrently. The guidance includes a set of detailed rules that expand on this general concept.

First, if an individual elected COBRA outside of the initial 60-day election period for doing so, the individual generally has one year and 105 days after the date the COBRA notice was provided to make the initial COBRA premium payment. The 105 days is the sum of:

Second, individuals who elect COBRA within the initial 60-day COBRA election period have one year and 45 days after the date of the COBRA election to make their first COBRA premium payment.

In addition, individuals must make their initial COBRA elections by the earlier of either:

Also under Notice 2021-58, an individual's initial COBRA premium cannot be due before November 1, 2021—provided that the individual makes the first COBRA premium payment within one year and 45 days after the individual's COBRA election date. Additional rules apply to subsequent premium payments. Specifically, the most time an individual has to make a subsequent COBRA premium payment (that is, through the end of the outbreak period) is one year from the date the payment originally would have been due without the Departments' outbreak period guidance. This extended deadline:

Notice 2021-58 also provides that the extended timeframes under the Departments' outbreak period rules do not apply to the deadlines for either:

An individual with a disregarded time period under the outbreak period rules:

(See Practice Note, COBRA Premium Assistance Under ARPA-21: DOL Guidance.)

However, disregarded time periods under the outbreak period rules still apply to payments of COBRA premiums after the end of the ARPA-21/COBRA premium assistance period. This assumes that the individual is still eligible for COBRA and the outbreak period has not ended.

The IRS's notice includes numerous examples illustrating how the various COBRA COVID-19 relief rules work and interact with one another.

In one example, Employee A, a participant in an employer-sponsored group health plan:

The example addresses when Employee A must make initial and subsequent monthly COBRA premium payments. Specifically, Employee A must make the initial COBRA premium payment by November 14, 2021 (that is, one year and 105 days after August 1, 2020). This is because Employee A did not elect COBRA under the outbreak period rules within 60 days of receiving the COBRA election notice.

The initial COBRA premium payment includes 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). In addition, premium payments would be due every month after that for the months that Employee A remains eligible for COBRA.

In an extension of this example, Employee A timely makes:

However, Employee A fails to make a payment for the December 2020 monthly premium as of December 31, 2021.

The example addresses how many months Employee A will have COBRA coverage. Specifically, Employee A is eligible for COBRA for August through November 2020. But Employee A is not eligible for COBRA for months after November 2020 because Employee A did not pay the December 2020 premium by the end of the applicable grace period. As a result, the plan need not cover benefits or services for Employee A incurred after November 30, 2020.

As is often the case with COBRA compliance, these latest relief rules are detailed and not especially intuitive. In light of the various COVID-19 relief and related timeframes and outbreak periods, COBRA administrators will need to continue closely tracking COBRA-eligible individuals to determine whether COBRA elections are timely and premium payments are timely and sufficient in amount.