Covered employers should know that their workers and their families have the right to elect COBRA continuation coverage after group health coverage ends, but they might not be ready for the flood of COBRA claims that could be coming. Because of a surge in unemployment and a final rule from the IRS, Employee Benefit Adviser is warning that employers and benefit administrators should prepare for a possible COBRA avalanche.
Unemployment Rates and COVID-19
COVID-19 has resulted in a surge of unemployment. Some workers were furloughed, at least initially, while others were simply laid off, but the overall impact was huge.
According to Pew Research Center, unemployment increased more during three months of COVID-19 than it did during two years of the Great Recession. In February 2020, unemployment was at 6.2 million or 3.8%. By May 2020, unemployment had increased to 20.5 million or 13%.
In October, unemployment rates dropped in 37 states, according to CNN, but these numbers could rise again along with COIVD-19 infections. The pandemic is spreading rapidly in many parts of the country, and many states and cities have started to respond with a second round of shutdowns. The crisis is not over.
COBRA Elections and the Pandemic
Plan administrators are required to notify eligible individuals about their COBRA coverage options. Individuals then have 60 days to elect coverage, and they have 45 days after that to make the first payment.
At least, this used to be true. COVID-19 has changed things.
Under a new rule created in response to the pandemic, the deadline for COBRA elections has been extended. Specifically, the period starting March 1, 2020 and ending 60 days after the announced end of the National Emergency or “such other date announced by the Agencies in a future notification” must be disregarded when determining the 60-day election period for COBRA continuation coverage and the date for making COBRA premium payments.
When Will the National Emergency End?
Despite progress made toward the development of a vaccine, it is not clear when the COVID-19 health crisis will end. According to the U.S. Department of Health & Human Services, a public health emergency has existed nationwide since January 27, 2020, and the emergency period has been renewed repeatedly – on April 21, July 23 and October 23.
Once the emergency is finally declared over, the COBRA election extension will continue for another 60 days. After that, individuals who qualified for COBRA during the outbreak period will still have the normal 60 days to make an election and then 45 days to pay.
It’s also important to remember that COBRA coverage retroactively begins starting when coverage would have otherwise ended. For now, COBRA elections are in a state of limbo, and plan administrators cannot know for certain who will elect coverage or how big the backlog of COBRA claims will be.
But There’s Good News
The current situation might have you ready to throw in the towel, but there is a light at the end of the tunnel. With Travisoft, you can manage everything from COBRA notices and COBRA claims to ACA reports, retiree billing and more – and you can do it all from home.