In Notice 2021-58[1] the IRS returned to the subject of various emergency extensions for certain COBRA actions issued jointly by the IRS and Department of Labor beginning in May of 2020.

The IRS describes that original notice as follows:

On May 4, 2020, in response to the National Emergency concerning the Novel Coronavirus Disease (COVID-19) Outbreak (National Emergency), the Agencies published the Joint Notice, which extended certain timeframes otherwise applicable to group health plans, disability and other welfare plans, pension plans, and their participants and beneficiaries under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code of 1986 (Code). The Joint Notice extended these timeframes by requiring that plans subject to ERISA or the Code disregard the period for certain action from March 1, 2020, until 60 days after the announced end of the National Emergency or such other date announced by the Agencies in a future notification (the Outbreak Period), subject to a maximum disregarded period of one year.[2]

The Notice goes on to describe a clarification published in February of 2021:

On February 26, 2021, DOL, with the concurrence of HHS, the Treasury Department, and the IRS, issued EBSA Disaster Relief Notice 2021-01, which clarified that the disregarded periods apply from the date each individual or plan was first eligible for relief under the Joint Notice. Under EBSA Disaster Relief Notice 2021-01, the applicable periods under the Emergency Relief Notices for individuals and plans are therefore disregarded until the earlier of (1) one year from the date the individuals and plans were first eligible for relief, or (2) 60 days after the announced end of the National Emergency (the end of the Outbreak Period). At the end of an individual’s or plan’s disregarded period, the applicable timeframes that were disregarded under the Joint Notice resume.[3]

Finally, the Notice goes on to describe additional changes in the area made by the American Rescue Plan Act of 2021 (ARPA) and later IRS guidance on these ARPA changes:

On March 11, 2021, the ARP was enacted. Section 9501 of the ARP provides for temporary COBRA premium assistance for certain “Assistance Eligible Individuals” for periods of coverage beginning on or after April 1, 2021, through periods of coverage beginning on or before September 30, 2021. On May 18, 2021, the IRS and the Treasury Department issued Notice 2021-31 providing guidance regarding COBRA continuation coverage and COBRA premium assistance under the ARP.

On July 26, 2021, the Treasury Department and the IRS issued Notice 2021-46, providing further guidance regarding COBRA continuation coverage and COBRA premium assistance under the ARP.[4]

The following timeframes were provided extensions by the original Joint Notice:

• The 60-day election period for COBRA continuation coverage under section 605 of ERISA and section 4980B(f)(5) of the Code,

• The dates for making COBRA premium payments under section 602(2)(C) and (3) of ERISA and section 4980B(f)(2)(B)(iii) and (C) of the Code,

• The date for individuals to notify the plan of a qualifying event or determination of disability under section 606(a)(3) of ERISA and section 4980B(f)(6)(C) of the Code, and

• The date for providing a COBRA election notice under section 606(c) of ERISA and section 4980B(f)(6)(D) of the Code for group health plans and their sponsors and administrators.[5]

The relief provided that these COBRA timelines are to be disregarded until the earlier of:

• One year from the date that individuals and plans were first eligible for relief, or

• The end of the Outbreak Period.[6]

The “Outbreak Period” is 60 days after the announced end of the National Emergency.[7]

In footnotes, the Notice clarifies information regarding starting dates.  In footnote 7 the Notice provides:

The first date upon which an individual or plan could be eligible for relief was March 1, 2020, the first day of the National Emergency. Therefore, the earliest date upon which a disregarded period could begin to run again was March 1, 2021, including for periods beginning before March 1, 2020, during which an action was required or permitted to be completed.[8]

While footnote 14 provides:

For an individual with a right to COBRA continuation coverage, the date of the applicable event will be the date the individual action would otherwise have been required or permitted. For group health plans, the date of the applicable event will be the date the plan would otherwise be required to provide a COBRA election notice.[9]

Extensions Under the Emergency Relief Notices to COBRA Elections and Payment of COBRA Premiums

The guidance had previously provided relief regarding the dates a participant had to elect COBRA coverage and pay COBRA premiums during the Outbreak Period.  The new Notice “clarifies that the disregarded period for an individual to elect COBRA continuation coverage and the disregarded period for the individual to make initial and subsequent COBRA premium payments generally run concurrently.”[10]

The Notice provides the following rules for the timeframes that apply to individuals making initial COBRA premium payments under the Emergency Relief Notices:

• If an individual elected COBRA continuation coverage outside of the initial 60-day COBRA election timeframe, that individual generally will have one year and 105 days after the date the COBRA notice was provided to make the initial COBRA premium payment.

• If an individual elected COBRA continuation coverage within the initial 60-day COBRA election timeframe, that individual will have one year and 45 days after the date of the COBRA election to make the initial COBRA premium payment.[11]

Individuals must make the initial COBRA election by the earlier of:

• One year and 60 days after the individual’s receipt of the COBRA election notice, or

• The end of the Outbreak Period.[12]

The Notice points out that generally the maximum relief period would be one year for an individual, but notes:

…these timeframes are subject to the transition relief provided in section IV of this notice, which provides that in no event will an initial COBRA premium payment be due before November 1, 2021, as long as the individual makes the initial COBRA premium payment within one year and 45 days after the election date.[13]

For subsequent COBRA payments, the Notice provides the following:

For each subsequent COBRA premium payment, the maximum time an individual has to make a payment while the Outbreak Period continues is one year from the date the payment originally would have been due in the absence of the Emergency Relief Notices, including the mandatory 30-day grace period, but subject to the transition relief provided below.[14]

The special transitional relief for certain COBRA payments to November 1 provides:

Because some individuals may have assumed that the disregarded period for making the initial premium payment begins on the date of the COBRA election, individuals who made elections more than 60 days after receipt of the election notice may have less time than they anticipated to make the initial premium payment. Therefore, to avoid inequitable outcomes, in no event will an individual be required to make the initial premium payment before November 1, 2021, even if November 1, 2021 is more than one year and 105 days after the date the election notice was received, provided that the individual makes the initial premium payment within one year and 45 days after the date of the election. This transition relief does not result in an individual having a disregarded period related to a particular COBRA timeframe that is more than one year. This transition relief is an exception to the general rule that disregarded periods for COBRA elections and initial COBRA payments run concurrently with respect to each individual.[15]

Interaction with the ARPA COBRA Premium Assistance

In March of 2021 the American Recovery Plan Act (ARPA) provided for special rules for COBRA premium assistance in a portion of 2021.  The Notice explains how these rules interact with the previously issued Emergency Relief Notice:

The extensions of the timeframes under the Emergency Relief Notices do not apply to the periods for providing the required notice of the ARP extended election period or for electing COBRA continuation coverage with COBRA premium assistance under the ARP. See Notice 2021-31, Q&A-57. An individual who has a disregarded period under the Emergency Relief Notices may elect retroactive COBRA continuation coverage, subject to the guidance in this notice, and may elect COBRA continuation coverage with COBRA premium assistance for any period for which the individual is eligible for COBRA premium assistance. However, the disregarded periods under the Emergency Relief Notices continue to apply to payments of COBRA premiums after the end of the ARP COBRA premium assistance period, to the extent that the individual is still eligible for COBRA continuation coverage and the Outbreak Period has not ended.[16]

Examples of Application of the Notice’s Provisions

The IRS provides a series of examples of the application of the provisions in the notice.  The first set deal with applying the extensions under the Emergency Relief Notices to COBRA elections and payment of COBRA premiums:

Example 1, Notice 2021-58, Section VI.A COBRA election made more than 60 days after receipt of COBRA election notice under the Emergency Relief Notices.

(i) Facts. Individual A participates in Employer X's group health plan. On August 1, 2020, Individual A has a qualifying event and receives a COBRA election notice. Individual A elects COBRA continuation coverage on February 1, 2021, retroactive to August 1, 2020. When must Individual A make the initial COBRA premium payment and subsequent monthly COBRA premium payments?

(ii) Conclusion. Individual A has until November 14, 2021 to make the initial COBRA premium payment (one year and 105 days after August 1, 2020), because Individual A did not elect COBRA continuation coverage under the Emergency Relief Notices within 60 days after receipt of the election notice. The initial COBRA premium payment would include monthly premium payments for August 2020 through October 2020. The November 2020 monthly COBRA premium payment would be due by December 1, 2021 (one year and 30 days after November 1, 2020), with premium payments due every month after that for the months that Individual A is eligible for COBRA continuation coverage.

Example 2, Notice 2021-58, Section VI.A COBRA election made within 60 days of the receipt of COBRA election notice under the Emergency Relief Notices.

(i) Facts. Individual B participates in Employer Y's group health plan. Individual B has a qualifying event and receives a COBRA election notice on October 1, 2020. Individual B elects COBRA continuation coverage on October 15, 2020 retroactive to October 1, 2020. When must Individual B make the initial COBRA premium payment and subsequent monthly COBRA premium payments?

(ii) Conclusion. Individual B has until November 29, 2021, to make the initial COBRA premium payment (one year and 45 days after October 15, 2020) because Individual A elected COBRA within 60 days of receiving the election notice. The initial COBRA premium payment would include only the monthly premium payment for October 2020. The November 2020 monthly COBRA premium payment would be due by December 1, 2021 (one year and 30 days after November 1, 2020), with premium payments due every month after that for the months Individual B is eligible for COBRA continuation coverage.

Example 3, Notice 2021-58, Section VI.A Timeframe for electing COBRA under the Emergency Relief Notices.

(i) Facts. Individual C participates in Employer Z's group health plan. Individual C has a qualifying event and is provided a COBRA election notice on August 1, 2020. When must Individual C elect COBRA continuation coverage and, if Individual C elects COBRA continuation coverage, when must Individual C make the initial COBRA premium payment?

(ii) Conclusion. Individual C has until September 30, 2021 (one year and 60 days after August 1, 2020) to elect COBRA continuation coverage. If Individual C elects COBRA continuation coverage after September 30, 2020 (but on or before September 30, 2021) Individual C has until November 14, 2021 to make the initial COBRA premium payment (one year and 105 days after receipt of the election notice). If Individual C makes the initial COBRA premium payment on November 14, 2021, that premium payment would include the monthly premiums for August 2020 through October 2020. The November 2020 monthly COBRA premium payment would be due by December 1, 2021 (one year and 30 days after November 1, 2020), with premium payments due every month after that for the months Individual C is eligible for COBRA continuation coverage.

Example 4, Notice 2021-58, Section VI.A Failure to make COBRA premium payments under the Emergency Relief Notices.

(i) Facts. The facts are the same as in Example 1. In addition, Individual A timely makes the initial COBRA premium payment covering the months of August 2020 through October 2020, as well as the payment for the November 2020 monthly premium. Individual A does not make a payment for the December 2020 monthly premium as of December 31, 2021. For how many months does Individual A have COBRA continuation coverage?

(ii) Conclusion. Individual A is entitled to COBRA continuation coverage for the months of August 2020 through November 2020, but Individual A is not entitled to COBRA continuation coverage for any month after November 2020 because Individual A did not pay the December 2020 premium by the end of the applicable grace period. Benefits and services provided by the group health plan (for example, doctor's visits or filled prescriptions) that occurred on or before November 30, 2020, would be covered under the terms of the plan. The plan would not be obligated to cover benefits or services for Individual A that were incurred after November 30, 2020.

Example 5, Notice 2021-58, Section VI.A Applying the transition relief for COBRA premium payments due before November 1, 2021.

(i) Facts. The facts are the same as in Example 1, except that Individual A has a qualifying event on April 1, 2020. Individual A receives the COBRA election notice on April 1, 2020 and elects COBRA continuation coverage on October 1, 2020, retroactive to April 1, 2020. As of July 15, 2021, Individual A has not made the initial premium payment. When must Individual A make the initial premium payment for COBRA continuation coverage retroactive to April 1, 2020 under the Emergency Relief Notices?

(ii) Conclusion. Under the transition relief provided in this notice, Individual A has until November 1, 2021 to make the initial premium payment, even though November 1, 2021 is more than one year and 105 days after April 1, 2020. Although the disregarded periods for the COBRA election and the initial premium payment run concurrently, under the transition relief provided in this notice, an individual will not be required to make the initial premium payment before November 1, 2021, as long as the individual makes the initial premium payment within one year and 45 days after the date of election. November 1, 2021 is less than one year and 45 days after October 1, 2020. Therefore, Individual A remains eligible to make the initial premium payment by November 1, 2021. The initial COBRA premium payment would include the monthly premium payments for April 2020 through October 2020. The November 2020 COBRA premium payment would be due by December 1, 2021 (one year and 30 days after November 1, 2020), with premium payments due every month after that for the months Individual A is eligible for COBRA continuation coverage.

Example 6, Notice 2021-58, Section VI.A Failure to make initial premium payment within one year and 45 days of election.

(i) Facts. The facts are the same as in Example 5, except that Individual A elects COBRA continuation coverage on May 1, 2020. As of October 1, 2021, Individual A has not made the initial premium payment for COBRA continuation coverage beginning April 1, 2020. On October 1, 2021 is Individual A eligible to make the initial premium payment for COBRA continuation coverage retroactive to April 1, 2020 under the Emergency Relief Notices?

(ii) Conclusion. No. October 1, 2021 is more than one year and 45 days after May 1, 2020. The maximum disregarded period related to a particular COBRA timeframe cannot be more than one year. Therefore, Individual A is no longer eligible to timely make the initial COBRA premium payment for COBRA continuation coverage retroactive to May 1, 2020 under the Emergency Relief Notices, despite the availability of transition relief. However, if Individual A is an Assistance Eligible Individual, Individual A has COBRA continuation coverage with COBRA premium assistance for the periods of coverage beginning April 1, 2021. Individual A may continue to pay for COBRA continuation coverage after September 2021 through the end of the period that Individual A is eligible for COBRA continuation coverage, if Individual A remains eligible for COBRA continuation coverage.

The IRS then concludes with four examples of applying the ARPA modifications:

Example 7, Notice 2021-58, Section VI.B Deadline for retroactive COBRA continuation coverage under the Emergency Relief Notices for a potential Assistance Eligible Individual under the ARP.

(i) Facts. Individual A works for Employer X and participates in Employer X's group health plan. On August 1, 2020, Individual A has a qualifying event that is an involuntary termination of employment, and, therefore, is a potential Assistance Eligible Individual under the ARP. Individual A receives a COBRA election notice on August 1, 2020, but, as of September 1, 2021, has not yet elected COBRA continuation coverage. Individual A also receives the notice of the ARP extended election period on May 31, 2021, but does not elect COBRA continuation coverage with premium assistance under the ARP. When is the last date for Individual A to elect COBRA continuation coverage retroactive to August 1, 2020 under the Emergency Relief Notices?

(ii) Conclusion. Individual A has until September 30, 2021 (one year and 60 days after August 1, 2020) to elect COBRA continuation coverage retroactive to August 1, 2020 under the Emergency Relief Notices. Provided Individual A elects COBRA continuation coverage by September 30, 2021, Individual A would have until November 14, 2021 to make the initial COBRA premium payment (one year and 105 days after August 1, 2020). The initial COBRA premium payment would include monthly premium payments for August 2020 through October 2020. The November 2020 premium payment would be due by December 1, 2021 (one year and 30 days after November 1, 2020), with premium payments due every month after that for the months Individual A is eligible for COBRA continuation coverage.

Example 8, Notice 2021-58, Section VI.B Failure to elect retroactive COBRA continuation coverage under the Emergency Relief Notices by a potential Assistance Eligible Individual under the ARP.

(i) Facts. Individual B works for Employer Y and participates in Employer Y's group health plan. On March 1, 2021, Individual B has a qualifying event that is an involuntary termination of employment, and, therefore, is a potential Assistance Eligible Individual under the ARP. Individual B receives the COBRA election notice the same day. Individual B receives the COBRA election notice for the ARP extended election period on May 31, 2021, and elects COBRA continuation coverage with COBRA premium assistance beginning April 1, 2021 but does not elect COBRA continuation coverage retroactive to March 1, 2021. Must Individual B be permitted on or after August 1, 2021, to elect retroactive COBRA continuation coverage beginning March 1, 2021?

(ii) Conclusion. No. Because Individual B elected COBRA coverage with premium assistance under the ARP, Individual B remained eligible only until July 30, 2021 (60 days after the receipt of the notice of the ARP extended election period) to elect COBRA continuation coverage retroactive to March 1, 2021. Employer Y's group health plan may require Individual B to elect COBRA continuation coverage retroactive to the loss of coverage within 60 days of receiving the notice of the ARP extended election period or lose eligibility for retroactive coverage under the Emergency Relief Notices. Because Individual B did not elect retroactive COBRA continuation coverage (beginning March 1, 2021) under the Emergency Relief Notices by July 30, 2021, Employer Y's plan is not required to permit Individual B to elect COBRA continuation coverage retroactive to March 1, 2021 under the Emergency Relief Notices. If Individual B had not elected COBRA continuation coverage with premium assistance under the ARP, Individual B would remain eligible to elect COBRA continuation coverage retroactive to March 1, 2021, until April 30, 2022 (one year and 60 days after March 1, 2021). However, COBRA premium assistance under the ARP would not be available for this coverage.

Example 9, Notice 2021-58, Section VI.B Payment for retroactive COBRA continuation coverage under the Emergency Relief Notices by a potential Assistance Eligible Individual under the ARP.

(i) Facts. On November 1, 2020, Individual C has a qualifying event that is an involuntary termination of employment, and, therefore, is a potential Assistance Eligible Individual under the ARP. Individual C receives the COBRA election notice on the same date. On April 30, 2021, Individual C receives the notice of the ARP extended election period. On May 31, 2021, Individual C elects both retroactive COBRA continuation coverage beginning on November 1, 2020, and COBRA continuation coverage with premium assistance for the first period of coverage beginning on or after April 1, 2021. When are the deadlines for Individual C to make the initial COBRA premium payment and subsequent monthly COBRA premium payments?

(ii) Conclusion. Individual C has until February 14, 2022 to make the initial COBRA premium payment (one year and 105 days after November 1, 2020). The initial COBRA premium payment would include premium payments for November 2020 through January 2021. The February 2021 premium payment would be due by March 3, 2022 (one year and 30 days after February 1, 2021), and the March 2021 premium payment would be due by March 31, 2022 (one year and 30 days after March 1, 2021). Premium payments would be due every month after that for the months Individual C is eligible for COBRA continuation coverage, except that no payments would be due for the periods beginning on or after April 1, 2021, through September 30, 2021.

Example 9, Notice 2021-58, Section VI.B COBRA premium payment after the end of the period of COBRA premium assistance by an Assistance Eligible Individual under the ARP and application of the Emergency Relief Notices.

(i) Facts. The facts are the same as in Example 9, except that Individual C makes the initial COBRA premium payment by February 14, 2022, fails to make the premium payment for the February 2021 period of coverage by March 3, 2022, and fails to make the premium payment for the March 2021 period of coverage by March 31, 2022. Individual C then makes a COBRA premium payment on May 1, 2022. For which months does Individual C have COBRA continuation coverage?

(ii) Conclusion. Individual C has retroactive COBRA continuation coverage for November 2020, December 2020, and January 2021 because Individual C made a timely initial COBRA premium payment under the Emergency Relief Notices. Individual C does not have coverage for the months of February or March 2021 because Individual C did not make timely COBRA premium payments by March 3, 2022 (one year and 30 days after February 1, 2021) or March 31, 2022 (one year and 30 days after March 1, 2021). Individual C has COBRA continuation coverage with COBRA premium assistance for the periods of coverage from April 1, 2021 through September 30, 2021 because Individual C is an Assistance Eligible Individual and made a timely election under the ARP. Individual C also has COBRA continuation coverage for October 2021 (because Individual C made a premium payment on May 1, 2022) unless Individual C indicates that the May 1, 2022 premium payment was intended to pay premiums for a period during which Individual C was eligible for COBRA premium assistance.17 If the premium payment was not erroneously paid for coverage during a premium assistance period, the COBRA premium payment made on May 1, 2022 must be credited to the period following the ARP COBRA period because that COBRA premium payment is timely under the Emergency Relief Notices (the payment on May 1, 2022 is made within one year and 30 days after October 1, 2021). Individual C may continue to pay for COBRA continuation coverage for the period after October 2021 until Individual C has paid for the last of the months that Individual C is eligible for COBRA continuation coverage.

Effective Date

The Notice was effective upon its release date of October 6, 2021.[17]

[1] Notice 2021-58, October 6, 2021, https://www.taxnotes.com/research/federal/irs-guidance/notices/guidance-clarifies-emergency-cobra-extensions/7bbdx (retrieved October 15, 2021)

[2] Notice 2021-58, October 6, 2021

[3] Notice 2021-58, October 6, 2021

[4] Notice 2021-58, October 6, 2021

[5] Notice 2021-58, October 6, 2021

[6] Notice 2021-58, October 6, 2021

[7] Notice 2021-58, October 6, 2021, Section II.B

[8] Notice 2021-58, October 6, 2021, Footnote 7

[9] Notice 2021-58, October 6, 2021, Footnote 14

[10] Notice 2021-58, October 6, 2021, Section III

[11] Notice 2021-58, October 6, 2021, Section III

[12] Notice 2021-58, October 6, 2021, Section III

[13] Notice 2021-58, October 6, 2021, Section III

[14] Notice 2021-58, October 6, 2021, Section III

[15] Notice 2021-58, October 6, 2021, Section IV

[16] Notice 2021-58, October 6, 2021, Section V

[17] Notice 2021-58, October 6, 2021, Section VIII