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Benefit Implications of the End of the COVID-19 Outbreak Period

February 02 - Posted at 1:12 PM Tagged: , , , ,

The COVID-19 Outbreak Period was declared effective on March 1, 2020. It had numerous impacts upon employee benefit plans, extending timelines with which plan participants and plan sponsors/employers had to perform certain benefit-related activities. On January 30, 2023, President Biden declared he would end the National Emergency effective May 11, 2023.

To recap, the declaration of the Outbreak Period impacted benefit plans in many ways by instructing ERISA plans and participants to disregard the Outbreak Period for:

  1. 30-day timeframe for a participant to elect HIPAA special enrollment;
  2. 60-day timeframe for a participant to elect CHIPRA special enrollment;
  3. 60-day timeframe for a participant to elect COBRA continuation coverage;
  4. Timeframe for a participant or Qualified Beneficiary to notify a plan of a qualifying event or disability determination;
  5. Timeframe for the plan to provide a COBRA election notice;
  6. Timeframe for a participant to timely pay COBRA premiums; and
  7. Timeframe for a participant to file claims, appeals, and requests for external review.

However, it is important to note that ERISA contains language limiting timeline extensions to no more than one year. Thus for example, the normal 60-day timeframe for a an eligible Qualified Beneficiary to elect COBRA continuation coverage was extended by the Outbreak Period to one year plus 60 days.

With the declaration of the end of the National Emergency on May 11, 2023, the 60-day clock to end the Outbreak Period will start. This means that effective on July 10, 2023 (60 days after the end of the National Emergency) all of the pre-pandemic rules impacting the above items (and others) will go back to their normal timeframes.

 

DOL Issues Guidance on Outbreak Period Extensions

March 01 - Posted at 1:41 PM Tagged: , , , , , , , , ,

The COVID-19 extensions that the DOL and IRS had issued last year as part of their “Joint Notice” were set to expire at midnight on February 28th.  For weeks, many have been asking the DOL and IRS for guidance on how to handle the statutorily-mandated expiration, and as a result of the lack of guidance, most plans, TPAs, insurers, and COBRA administrators had to make a judgment call as to how to proceed.

But – with 2 days to spare – DOL finally issued Disaster Relief Notice 2021-01  on February 26th.

Notice 2021-01 sets forth the DOL and IRS’ position that the COVID-19 extensions will continue past February 28th, and that all such extensions must be measured on a person-by-person basis – which was not clear from the prior guidance.  Plans, TPAs, insurers, and COBRA administrators may have to reconsider their administrative practices in light of this new direction.

Short Background

The original Joint Notice (85 Fed. Reg. 26351 (May 4, 2020) required that health and retirement plans toll a number of deadlines for individuals during the COVID-19 National Emergency, plus a 60-day period (the “Outbreak Period”) starting March 1, 2020.

But, as described in Footnote 4 of the Joint Notice, ERISA and the Code limit DOL and Treasury’s ability to toll deadlines to one year (“Tolling Period”).

The deadlines impacted in the Joint Notice are:

  • Deadline to elect COBRA;
  • Deadline to pay COBRA premiums;
  • Deadline to elect HIPAA special enrollment;
  • Deadlines to file claims, appeals, and requests for external review; and
  • Deadline for plan to provide COBRA election notice


When there has been disaster relief guidance in the past, these periods have not bumped up against the statutorily-imposed one-year limit, so this COVID-19 extension is new territory – hence all the requests for the agencies to issue guidance regarding the expiration date.

Disaster Relief Notice 2021-01

In this late-breaking Notice 2021-01, DOL says it coordinated with HHS and IRS, and the agencies are interpreting the Tolling Period to be read on a person-by-person basis.

Specifically, DOL says that the Tolling Period ends the earlier of:

  1. One year from the date the deadline would have begun running for that individual; or
  2. 60 days from the end of the National Emergency (which is still ongoing).

This means that each individual has his or her own Tolling Period!

For example, a COBRA Qualified Beneficiary (QB) has 60 days to elect COBRA, counted from the later of their loss of coverage or the date their COBRA election notice is provided.  Under the Joint Notice, a QB’s 60-day deadline was tolled as of March 1, 2020, until the end of the Outbreak Period (that is, until the end of the National Emergency + 60 days).

At the end of the Outbreak Period, the deadlines would start running again, and the QB would have their normal 60-day COBRA election period (or the balance of their election period if it started before March 1, 2020).

BUT – with the 1-year expiration, DOL’s new Notice 2021-01 says that the one-year period does not end on February 28, 2021 for all individuals, but rather each individual has his/her own one-year Tolling Period.

Examples:

  • If QB A’s election period started 2/1/20, her election deadline was tolled as of 3/1/20. Her one-year Tolling Period would end 2/28/21, so her election period would start 3/1/21, and she would have the balance of her 60-day election period.
  • If QB B’s election period started 3/1/20, her election deadline was tolled as of 3/1/20. Her one-year Tolling Period would end 2/28/21, so her 60-day election period would start 3/1/21.
  • If QB C’s election period started 6/1/20, her election deadline was tolled right away, as of 6/1/20. Her one-year Outbreak Period would end 5/31/21, so her 60-day Tolling period would start 6/1/21.
  • If QB D’s election period starts 4/1/21, her election deadline also will be tolled right away on 4/1/21, as long as we are still in the National Emergency. Her one-year Tolling Period would end 3/31/22, so her 60-day election period would start 4/1/22.

For all of these examples, the tolling would end earlier if the National Emergency ends.  In that case, the election period would end 60 days after the end of the National Emergency.

Reasonable Accommodation Requirement

Notice 2021-01 also says that DOL recognizes that enrollees may continue to encounter COVID issues, even after the one-year Tolling Period expiration.  DOL says that the “guiding principle” is for plans to act reasonably, prudently, and in the interest of the workers and their families.  DOL says that plan fiduciaries should make “reasonable accommodations to prevent the loss of or undue delay in payment of benefits . . . and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames.”

Notice 2021-01 does not provide any direction regarding what would constitute a “reasonable accommodation.”  It sounds like plans may need a process to consider whether to continue to waive deadlines on a case-by-case basis, but without any guidance as to what parameters to apply.  And DOL suggests that failure to do so could be a fiduciary issue.


Notices

Regarding communicating these changes to enrollees, DOL says:

  • The plan administrator or fiduciary “should consider” affirmatively sending a notice regarding the end of the one-year relief period (presumably to each person based on her own customized extension period).
  • Plans “may need” to reissue or amend prior disclosures if they failed to provide accurate information regarding these new extension deadlines.
  • Plans “should consider” making enrollees aware of other coverage options, such as the Special Enrollment Period under the Health Insurance Marketplace.

DOL seems to be saying that plans may need to notify each individual when his or her one-year extension is about to be up and should include information about the Health Insurance Marketplace.  In addition, plans may need to update prior communications that did not anticipate this new DOL interpretation.

Enforcement

DOL says it acknowledges that there may be instances when plans or service providers themselves may not be able to fully and timely comply with pre-established timeframes and disclosure requirements.  DOL says that where fiduciaries have acted in “good faith and with reasonable diligence under the circumstances,” DOL’s approach to enforcement will be “marked by an emphasis on compliance assistance,” including grace periods or other relief.

Last week the Department of Health and Human Services, DOL and the IRS extended deadlines for multiple items related to health plan administration.  We don’t expect a huge influx of issues from the changes.  However, you should be aware so you don’t inadvertently misinform your employees.    

There were changes made regarding COBRA premium payments and election timeframes but since we have addressed those in a previous post, we won’t address it here.  COBRA administration is outsourced and those impacted are no longer employees so you can direct their questions to your COBRA administrator or to our office.  We’ll also skip the changes made to claims and appeals as that won’t apply to everyone.  That leaves the changes to your benefit program. 

As you are aware, most of the carriers have reduced or even eliminated the minimum number of hours a previously full-time employee must work to be covered by your plan.  Meaning, we can offer coverage to furloughed employees or those that have otherwise reduced hours to below the full-time requirements. 

In addition, the agencies, have decided to disregard the Outbreak Period (the time period between March 1st and at least 60 days after the announced end of the COVID 19 National Emergency) when establishing a deadline to request enrollment in coverage for certain qualifying events.  Meaning, the agencies, added a “pause” to the time frame required for employees to notify you about special enrollment periods, such as marriage or birth of a child.  We are not able to determine the exact end date of the Outbreak Period yet as that is based on an end to the National Emergency (and that had yet to be determined). 

For our examples, we’ll assume the COVID 19 National Emergency ends for the country on June 30th.  This would make the Outbreak Period March 1st to August 29th (60 days following June 30). 

Example 1 – Sally has a baby on March 3rd.  Normally, she would have 30 days to notify us that she would like to add the baby.  However, you are being instructed to disregard the Outbreak Period, therefore she has until September 28th (30 days from the end of the Outbreak Period) to let us know her desire to add her child.

Example 2 – Tom gets married June 1st.  He will have until September 28th to let us know if he intends to enroll his spouse. 

Under these examples, the dependents would be enrolled back to their original eligibility date and the employee would owe those back premiums.  I don’t expect this to become a big issue, however, depending on the employees circumstances it could.  The drawback to employers, other than the inconvenience, is this could have an impact on the group claims.  Normally Tom and Sally would only have 30 days to enroll their dependents.  With the extensions, employees have information about any issues or medical expenditures that have already happened along the way.  Carriers will be responsible to back up, enroll the dependent, and pay any claims incurred. 

Please let us know of any questions you have. 

DOL and IRS Announce Emergency COVID-19 COBRA Rules

May 04 - Posted at 10:49 AM Tagged: , , , , , ,

On April 29, 2020, the Department of Labor (DOL) and the Internal Revenue Service (IRS) announced in a Notice a “pause” in the timelines that affect many COBRA and HIPAA Special Enrollment Period timelines during the National Emergency due to the COVID-19 pandemic.

The National Emergency declaration for COVID-19 was issued on March 13, 2020, and as of the date of this writing, is still in effect. However, for purposes of COBRA in the eyes of the DOL, the “pause” date is set to begin on March 1, 2020. According to the Notice, the period from March 1 through 60 days after the date the National Emergency is declared ended is known as the “Outbreak Period.”

COBRA Timeline Changes During National Emergency

Normally, group health plan Qualified Beneficiaries (QBs) have 60 days from the date of a COBRA qualifying event to elect COBRA coverage, or in the case of a second COBRA qualifying event, to make a new COBRA election. Once a COBRA election is made, the first payment (going back to the date of the COBRA qualifying event) is due no more than 45 days later. After that, plan sponsors must allow at least a 30 day grace period for late COBRA payments.

According to the Notice, all of these timelines are affected. The 60-day election “clock” is paused beginning March 1, 2020 or later until the the end of the Outbreak Period. Similarly, the 45-day first payment “clock” is also paused during the Outbreak Period, as is the 30-day grace period for making COBRA payments.

Example

ABC Company’s group health plan is subject to COBRA continuation coverage. Jane Jetson and her family are covered under ABC’s group health plan. On February 1, 2020 Jane terminates employment at ABC, and on February 5th, Jane receives her COBRA election notice informing her she has 60 days from February 1st to make an election. Normally, that election period would end on April 1, 2020, 60 days from February 1st.

However, with the new DOL/IRS Notice, the “pause” button on the 60 day election period was hit on March 1st, the beginning of the Outbreak Period, so the 60 day clock stops at 29 days and doesn’t resume until the end of the Outbreak Period.  For sake of this example, let’s assume the National Emergency declaration is lifted on May 31, 2020. On July 30, 2020, 60 days after May 31st and thus the end of the Outbreak Period, the “pause” button is lifted and the COBRA election clock restarts for another 31 days to complete the 60 day COBRA election period, which now would end on August 30, 2020.

Continuing with the example and assumptions, if Jane did make her COBRA election to continue coverage on August 30th (the last day to do so), the 45 day clock to make the first payments back to February 1st would begin, and she would have to make all seven months’ payments by October 14, 2020. Of course, by that date she’d also owe payments for September and October as well, although she’d be in the middle of the grace period for October.

HIPAA Special Enrollment Period

Similarly, the 30 day HIPAA Special Enrollment Period (SEP) for qualified changes of status that impacts group health plan enrollment changes is also “paused” until after the end of the Outbreak Period.

Example

Homer Simpson also works for ABC Company, and has elected not to participate in ABC’s group health plan since he has coverage through his spouse Marge’s employer’s group health plan at XYZ Company. On March 15, 2020, Homer and Marge have a baby named Bart, and decide that Homer would like to cover his entire family under ABC’s plan. In normal times, Homer would have 30 days from the date of Bart’s birth to enroll in ABC’s group health plan utilizing the HIPAA SEP.

However, under the DOL/IRS Notice, that 30-day clock is on “pause” until the end of the Outbreak Period. Using the same assumption in the example above, that clock would start on July 30th, and Homer would have until August 30th to enroll his entire family.

Action Items for Plan Sponsors

Plan sponsors will need to pay close attention to this Notice and make proper adjustments in their established COBRA and HIPAA procedures to accommodate it. 

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