Pension & Benefits News COBRA noncompliance is high-risk, so be diligent about new requirements, expert says
Wednesday, April 21, 2021

COBRA noncompliance is high-risk, so be diligent about new requirements, expert says

By Pension and Benefits Editorial Staff

The Department of Labor (DOL) has recently issued guidance on two new aspects of COBRA administration, and compliance with these requirements should be a priority, according to an expert at a recent Mercer webinar. According to Katharine Marshall, principal in Mercer’s Law & Policy Group, “COBRA noncompliance is high-risk, and the new requirements require careful, diligent planning and administration.”

In February, the DOL issued guidance on the COVID-19 outbreak period relief issued last year. Marshall noted that plans and administrators were wondering what to do with all of the HIPAA special enrollments, COBRA elections, and premium payments “that have been held in abeyance since the outbreak period began on March 1, 2020.” In the guidance, the DOL clarified that the relief is limited to one year, but that one-year limit is individualized for each event or deadline subject to the relief.

“The result is a lot of work for plans and administrators not only to identify the end of the relief period for each individual, but to inform each individual of the end date as encouraged by the DOL,” she said. “The DOL also reminds us that plan administrators should act reasonably prudently and in the interest of workers and their families and in doing so should make accommodations to prevent the loss of coverage or the delay in payment of benefits.”

Marshall noted that COBRA is highly litigated, so there is a lot of risk to a plan that does not comply. “So, take a minute to check with your COBRA administrators make sure they are individualizing the outbreak period relief appropriately and sending notices informing individuals of the adjusted deadlines for election and payment,” she advised.

COBRA subsidy. The American Rescue Plan Act (ARPA), which was signed into law on March 11, 2021, includes a temporary six-month COBRA subsidy that allows qualified individuals to stay on their employer-sponsored health plan at no cost. Individuals qualify for the COBRA subsidy when they have lost group health plan coverage due to a layoff, furlough, or reduction in hours. The subsidy became available on April 1, 2021 and will generally end on September 30, 2021.

The DOL recently issued model notices for implementing the COBRA subsidy, as well as FAQs for individuals and employers. According to Marshall, the FAQs “seem to address more questions from individuals than from plans and administrators. There are still so many questions that seem to remain unanswered, so hopefully we will receive more guidance in the short-term.”

However, she noted that now that the model notices are available, “managing the appropriate distribution of the notices and the second election opportunity should be a priority for the same reason proper management of the outbreak period relief is a priority—COBRA noncompliance is high-risk.”

SOURCE: Mercer, Washington Update Briefing webinar, April 7, 2021.

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