The IRS issued guidance on the application of the COVID-19 Outbreak Period extensions to COBRA election and premium payment deadlines. The guidance was released as a coordinated effort with the Department of Labor (DOL) and the Department of Health and Human Services (HHS).

In 2020, these agencies specified that taxpayers should disregard the COVID-19 Outbreak Period when calculating COBRA election and payment deadlines. The Outbreak Period lasts from March 1, 2020, to the date that falls on the sixtieth day after the announced end of the COVID-19 emergency. In early 2021, the DOL clarified that the extensions are measured on a case-by-case basis and end (1) one year from the original election or payment due date or (2) the end of the Outbreak Period, whichever is earlier.

The guidance clarifies that the disregarded period for electing COBRA and the disregarded period for making initial and subsequent COBRA premium payments run concurrently.

In effect,

(1) individuals electing COBRA after the initial 60-day election period have one year and 105 days, which consists of one year plus the 60-day election period and the 45-day initial payment period after the election notice is provided, to make the initial premium payment; and

(2) individuals electing COBRA within the 60-day election period have one year and 45 days after the date of their election to make the initial payment.

Taxpayers have one year from the date the payment would have otherwise been due to make subsequent premium payments. As a result, individuals who delay electing COBRA may not have more than one year of total disregarded time for the COBRA election and initial premium payment.

A transition rule provides that in no event will an initial COBRA premium payment be due before November 1, 2021, provided that the individual makes the initial COBRA premium payment within one year and 45 days after the election date. The IRS regulations were promulgated with the intent to avoid inequitable outcomes for individuals who may have assumed that the disregarded period for the initial premium payment began on the date of the COBRA election.

The Outbreak Period extensions do not apply to the provision of notices under the American Rescue Plan Act of 2021 (ARPA) or elections of the COBRA subsidy. Individuals who have a disregarded period because of the Outbreak Period extensions may elect retroactive COBRA coverage and elect COBRA with the subsidy for any period for which they are eligible for the subsidy. The Outbreak Period extensions remain in effect for COBRA premium payments after the end of the subsidy period to the extent the individual is still eligible for COBRA and the Outbreak Period has not yet ended.