Tag: Consolidated Omnibus Budget Reconciliation Act (COBRA)

COVID national emergency ends, COBRA says what?

By Anita Byer, Setnor Byer Insurance & Risk

The COVID national emergency is officially over. On April 10, 2023, House Joint Resolution 7 was signed into law, ending the national emergency declared back in March 2020 due to the COVID-19 pandemic. (The COVID public health emergency, which was declared separately, is scheduled to end May 11, 2023.) The end of the national emergency will have significant implications for employer-provided group health plans, particularly when it comes to dealing with the Consolidated Omnibus Budget Reconciliation Act a/k/a COBRA.

COBRA generally requires covered group health plans to provide a temporary continuation of group health coverage that would otherwise be lost due to the occurrence of certain qualifying events, like termination of employment. To give individuals more time to elect and pay for COBRA coverage during the pandemic, the Department of Labor (DOL), IRS and other federal agencies issued multiple notices stating that the following time periods and dates must be disregarded when determining COBRA deadlines:

  • the 60-day period to elect COBRA continuation coverage;
  • the 45-day period to make the initial COBRA premium payment;
  • the 30-day grace period to make monthly COBRA premium payments;
  • the date for individuals to notify the plan of a qualifying event; and
  • the date for plans to provide COBRA election notices to qualified beneficiaries.

The disregarded periods, which cannot exceed one year, are scheduled to end sixty days after the announced end of the COVID national emergency (the “Outbreak Period”). In other words, the COBRA time periods and dates were extended until one year from the date a participant or beneficiary was first eligible for relief, or the last day of the Outbreak Period, whichever is earlier. All COBRA extensions will end as of the last day of the Outbreak Period, but unfortunately, the actual date on which this is supposed to happen remains uncertain.

The uncertainty stems from the fact that the national emergency ended a month earlier than expected. The planned end date was May 11, 2023, which would have made July 10 the last day of the Outbreak Period (60 days from May 11), but things did not go according to plan. And while determining the actual end of the Outbreak Period should be simple (60 days from April 10), somehow it isn’t. You see, the DOL relied on the original plan when preparing a series of FAQs and examples to help the public navigate the end of the COBRA extensions, all of which assumed that the Outbreak Period would end July 10. Despite not being technically correct, the DOL has hinted that it plans to keep using July 10 as the last day of the Outbreak Period. Hopefully, additional guidance will be provided soon.

While the last day of our ‘COBRA extension adventure’ has yet to be determined, it is coming up fast. Affected employers should prepare in advance to avoid missteps along the way. The DOL’s FAQs are a good place to start, though some employers may require professional guidance to ensure compliance. Employers should also carry Employment Practices Liability Insurance to protect against mistakes that always seems to accompany significant legal and regulatory changes.

No one should expect the process of unwinding three years of COBRA extensions to be simple or seamless, but there is simple and obvious silver lining. Once the Outbreak Period ends, so do all the COBRA extensions. Please contact us to learn more about EPLI coverage.

Counting Employees for COBRA

If an employer has 13 full-time employees, each of whom works 40 hours per week, and 10 part-time employees, each of whom works 20 hours per week, can this employer qualify as a “small-employer plan” under the Consolidated Omnibus Budget Reconciliation Act (COBRA)?

Yes.  After a qualifying event, COBRA gives certain former employees the right to elect temporary continuation of health care coverage at the employer’s group rates. COBRA’s continuation of coverage requirement does not apply to a small-employer plan, which is a group health plan maintained by an employer who normally has employed fewer than 20 employees during the preceding calendar year.  Although all full-time and part-time employees are taken into account when determining whether an employer had fewer than 20 employees, each group of employees is counted differently. A full-time employee counts as one employee.  However, each part-time employee counts as a fraction of an employee, with the numerator (the top number) of the fraction equal to the number of hours worked by the part-time employee, and the denominator (the bottom number) equal to the number of hours that must be worked on a typical business day to be considered a full-time employee.

Though this formula may sound complicated, it’s fairly easy to apply. In the situation at hand, the employer’s 10 part-time employees work 20 hours per week out of the 40 hours per week ordinarily worked by full-time employees, thus producing a fraction of 20/40, or ½.  Therefore, each part-time employee is counted as ½ of an employee. Ten employees counted as “half” an employee equals 5 “whole” employees, which, when added to the number of full-time employees, 13, total 18 employees. Since this number is fewer than 20, this employer may qualify as a small-employer plan.