COBRA Archives - Spotlight on Benefits

COVID-19 National Emergency Plan Deadline Extensions Set to End This Summer

On January 30, 2023, President Biden announced the Administration’s plan to extend the current declarations of the COVID-19 national emergency and public health emergency (PHE) through May 11, 2023, and end both emergencies on that date. The end of the national emergency, which was originally declared in March 2020, will cause certain employee benefit plan-related deadline extensions to conclude this summer.

Specifically, under relief that the Department of Labor, the Department of the Treasury, and the Internal Revenue Service jointly provided effective March 1, 2020, the timeframes for taking the following actions were extended during the “Outbreak Period” for up to one year:

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Employers – Check Your Severance Arrangements Now!

If employees are required to provide proof of COVID-19 vaccination or a timely negative COVID-19 test, and/or wear a mask as a condition of employment (COVID-19 Policies), and an employee is terminated for violating a COVID-19 Policy, will that employee be entitled to severance benefits?

The answer depends on what the employer intends and the terms of the applicable severance arrangement which, for example, can be in the form of a severance plan, a severance agreement, or an employment agreement.

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IRS Guidance on New COBRA Subsidy Clarifies Many Outstanding Questions

On May 18, 2021, the IRS released Notice 2021-31, a lengthy series of FAQs clarifying many aspects of the new COBRA subsidy made available under the American Rescue Plan Act of 2021 (ARPA). The FAQs address many of the issues raised by plan sponsors since the subsidy was enacted earlier this year. Although this blog post does not address every nuance of the guidance—the IRS issued a whopping 86 FAQs—below we point out some clarifications that might be of interest to group health plan sponsors:

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ERISA Litigation Roundup: Eastern District of Michigan Weighs in on Allegations of COBRA Notice Violations

On May 4, 2021, the United States District Court for the Eastern District of Michigan granted in part and denied in part a motion to dismiss in a class action lawsuit regarding the adequate notice of the right to continued insurance coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). The decision follows a blitz of class action lawsuits alleging deficient COBRA notices and underscores the importance of careful review by employers.

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DOL Issues Model COBRA Subsidy Notices and Initial Guidance on COBRA Subsidy Relief under the American Rescue Plan Act of 2021

As discussed in our prior blog post, the American Rescue Plan Act of 2021 (ARP) requires employers that sponsor group health plans to provide a 100% COBRA subsidy for “Assistance Eligible Individuals” during the “Subsidy Period” (April 1 through September 30, 2021, or the date the participant is no longer an Assistance Eligible Individual, if earlier) and to offer a COBRA special election opportunity for certain individuals to enroll in COBRA coverage in order to receive the benefit of the COBRA subsidy.

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Employers Must Provide COBRA Subsidies to Assistance Eligible Individuals

The American Rescue Plan Act of 2021 (ARPA), which was signed into law by President Biden on March 11, 2021, includes COBRA subsidy provisions that are significant – both for the individuals who will become eligible for COBRA subsidies and for the employers who will be required to subsidize COBRA coverage. The key requirements of the COBRA subsidies, which are effective beginning April 1, 2021, are outlined below.

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COVID-19 Joint Agency Relief Part 3: COBRA and Special Enrollment Extensions

In light of the COVID-19 pandemic, the federal government recently issued guidance extending various benefits-related deadlines. The guidance includes a Notification of Relief that essentially tolls the timeframes associated with various rights until after the COVID-19 National Emergency. In this alert, we focus on what the tolling means with respect to plan sponsor obligations and participant rights under the Consolidated Omnibus Budget Reconciliation Act (COBRA) and the Health Insurance Portability and Accountability Act (HIPAA) special enrollment provisions.

For the full alert, visit the Faegre Drinker website.

Agencies Provide COVID-19-Related Extension for Numerous Benefit Plan Deadlines

On April 28, 2020, the U.S. Department of Labor (DOL) and the Internal Revenue Service issued a new final rule and additional guidance that together extend numerous deadlines under ERISA and the Internal Revenue Code (Code) that apply to group health plans, retirement plans, and participants in those plans (Extension Guidance). The extensions, which are being enacted in response to the COVID-19 pandemic and pursuant to the authority granted to the DOL by the CARES Act, promise to have a significant impact on employers’ administration of various benefit plan requirements, such as administration of benefit plan claims and appeals, COBRA continuation coverage and mid-year special enrollment in group health plan coverage.

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Beware the Snake in the Grass: COBRA Election Notice Considerations During The COVID-19 Pandemic

With most of the nation on lockdown due to the COVID-19 pandemic, many employers are in the unfortunate position of having to lay off workers or significantly reduce their hours. If these workers also lose employer-sponsored health coverage, they will experience a “qualifying event” under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), triggering the requirement to send COBRA election notices describing the employee’s (and spouse’s) right to elect to temporarily stay on their employer’s health plan. In these difficult times, employers should review their notices to ensure they are compliant with COBRA and provide adequate information to employees. Compliance is especially important because COBRA notices have become the subject of a growing trend of class action lawsuits filed by ex-employees alleging that their former employers did not provide sufficient notice of their COBRA rights.

Generally, COBRA requires notices to be drafted in a manner that the average plan participant can understand, and must provide specifics about continuation coverage, such as the contact information for the administrator, how to elect coverage, and how much coverage costs. The DOL has issued model notice letters to help employers meet these requirements.

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