The COVID-19 pandemic has brought about changes in the workplace, including the extension of deadlines for COBRA coverage for employees who have lost their jobs or had their hours reduced. This has been possible due to the National Emergency declared by the government. However, as the pandemic slowly comes under control, the question of what happens when the National Emergency expires arises.
What is COBRA?
COBRA, or Consolidated Omnibus Budget Reconciliation Act, is a federal law that allows employees who have lost their jobs or had their hours reduced to continue their health insurance coverage for a limited period of time. COBRA coverage is typically more expensive than regular insurance coverage, as the employer is no longer contributing to the premiums.
Extended COBRA Deadlines
The American Rescue Plan Act of 2021 (ARPA) provided for a 100% subsidy of COBRA premiums for certain individuals who lost their jobs or had their hours reduced due to COVID-19. This subsidy was available from April 1, 2021, through September 30, 2021. In addition, the ARPA extended the deadlines for individuals to elect COBRA coverage and to pay premiums for those who had previously elected coverage.
The deadline for individuals to elect COBRA coverage was extended to 60 days after they were notified of their eligibility for the subsidy, while the deadline to pay premiums was extended to the end of the 6-month coverage period. These extended deadlines were only available while the National Emergency was in effect.
Impact of Expiration of the National Emergency
When the National Emergency expires on May 11, 2023, the extended COBRA deadlines will end as well. This means that employers will need to be prepared to comply with the original COBRA deadlines for employees who lose their jobs or have their hours reduced. Employees will have 60 days to elect COBRA coverage, and premiums will need to be paid within 45 days of the election. Failure to comply with these deadlines could result in penalties and legal action.
Business owners/employers should be aware of the potential impact of the expiration of the National Emergency on their COBRA obligations. They should prepare to comply with the original COBRA deadlines and communicate this information to their employees. Employers may also want to consider offering alternative health insurance options for their employees to help ease the burden of the higher COBRA premiums.
Communication with employees is key, as is considering alternative health insurance options to ease the burden of the higher COBRA premiums. With proper planning and preparation, employers can navigate this transition smoothly and continue to provide valuable benefits to their employees.