IRS clarifies deadlines on COBRA extensions

The IRS has issued a notice that clarifies how to apply certain COBRA deadline extensions for electing COBRA coverage and paying COBRA premiums under Emergency Relief issued in response to the COVID-19 pandemic.

Under the Emergency Relief, up to one year must be disregarded when determining due dates for individuals to elect COBRA coverage and pay COBRA premiums during the Outbreak Period (i.e., 60 days after the announced end of the National Emergency).

This latest IRS notice clarifies that the disregarded periods to elect COBRA coverage and make initial and subsequent COBRA premium payments generally run concurrently. The guidance provides the following rules to illustrate COBRA deadlines:

• If an individual elected COBRA coverage within the initial 60-day COBRA election time frame, they have one year and 45 days after the date of the election to make their initial COBRA premium payment.

• If an individual elected COBRA coverage outside of the initial 60-day COBRA election time frame, they generally will have one year and 105 days after the date the COBRA notice was provided to make the initial COBRA premium payment (subject to transition relief).

The IRS notice also addresses the interaction of the Emergency Relief with the COBRA subsidies that were made available under the American Rescue Plan Act stimulus law that was enacted earlier this year. The guidance provides comprehensive examples illustrating how COBRA elections and premium payments are treated under this latest IRS notice, including how to apply the stimulus law’s premium subsidies.