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The IRS issued Notice 2021-58, which clarifies the one-year COBRA extensions provided by the Joint Notification of Extensions and guidance issued by the DOL’s Disaster Relief Notices. The 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. It states if an individual elects COBRA continuation coverage within the initial 60-day election period, the individual will have one year and 45 days after the date of the election to make the initial COBRA payments. However, if the individual makes the COBRA election outside of the initial 60-day period, the individual will have one year and 105 days after the COBRA notice date to make the initial COBRA payment.
The Notice also provides transition relief for COBRA initial premium payments: it allows individuals to make the first COBRA premium payment no later than November 1, 2021, provided it is less than one year and 45 days after the COBRA election date. All subsequent premium payments must be made monthly thereafter. Finally, the Notice provides examples of how the clarifications and transition relief are applied.