Professional Service Agreement

DOL and IRS Issue Rule to Extend COBRA Deadlines

May 20, 2020

The U.S. Department of Labor (“DOL”) and the Internal Revenue Service (“IRS”) have issued a Joint Rule to extend certain time frames for group health plans and other welfare and pension plans. Pursuant to the Rule, plans must disregard the period from March 1, 2020 until 60 days after the announced end of the National Emergency related to the COVID-19 outbreak (which is, at this time, an undetermined date). In the Rule, this period is referred to as the “Outbreak Period.”

The Rule provides that this relief applies in determining such deadlines as:

-The 60-day election period for COBRA continuation coverage
-The date for making COBRA premium payments; and
-The date for individuals to notify the plan of a qualifying event.

The Rule provides several examples of how disregarding the “Outbreak Period" would impact these deadlines. One such example is the situation where an employee has a reduction of hours below what is necessary to meet the group health plan eligibly requirements. If that employee was provided a COBRA election notice on April 1, 2020, what is the deadline for the employee to elect COBRA? The due date will be 60 days after the announced end of the National Emergency. In the Rule, the DOL and IRS used a hypothetical end date of June 29, 2020 which would make the COBRA election notice due on August 28, 2020.

SESCO Management Consultants will continue to monitor and report on developments with respect to the COVID-19 pandemic and will post updates in the firm’sCOVID-19 Resource Center as additional information becomes available.

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