IRS Clarifies Application of Deadline Extensions to COBRA

The Inner Income Service (IRS) not too long ago issued some much-needed steering surrounding the appliance of deadline extensions that the IRS and the U.S. Division of Labor (DOL) beforehand issued for preliminary elections underneath the Consolidated Omnibus Finances Reconciliation Act of 1985 (COBRA) and preliminary and subsequent premium funds.

On Might 4, 2020, the IRS and DOL introduced relief which offered that, for a interval starting on March 1, 2020, sure Worker Retirement Earnings Safety Act of 1974 (ERISA) plan deadlines can be paused for up to one yr, together with deadlines associated to COBRA, particular enrollment underneath the Well being Insurance coverage Portability and Accountability Act of 1996 (HIPAA), and claims and appeals.

In early 2021, the IRS and DOL clarified that the relevant deadlines usually can be paused till the sooner of: (1) 12 months from the date that the deadline in any other case would have began to run, or (2) 60 days after the date the COVID-19 nationwide emergency is asserted ended (referred to because the “Outbreak Period”).

This most up-to-date steering clarifies how the deadline extensions apply to COBRA elections and premium funds. In Notice 2021-58, the IRS states that the deadline extensions for COBRA elections and premium funds run concurrently, in order that solely a most of one yr might be disregarded for each the preliminary election and first fee deadlines. Particularly:

  • “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 discover 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 every subsequent COBRA premium fee deadline, people can have a most of one yr and 30 days from the unique fee due date.

The discover additionally offers transition aid for plans and contributors who assumed that the preliminary fee deadline suspension ran from the date of the COBRA election reasonably than concurrently with the election deadline suspension. People might make preliminary funds by November 1, 2021, even when that date is a couple of yr and 105 days from the date the person was first eligible for COBRA. In all instances, people should make preliminary premium funds inside one yr and 45 days of the date of the COBRA election to proceed the protection.

Additionally included in Discover 2021-58 are quite a few examples exhibiting how the COBRA deadline extensions apply.

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