TRI-AD recently published information about the end of the Outbreak Period. As mentioned in our prior blog, there have been questions on when the deadline relief expires for COBRA, HIPAA special enrollment/COBRA notifications, claims and appeals. On February 26, 2021, the Department of Labor (DOL) issued Disaster Relief Notice 2021-01, which provides guidance on the deadline relief. The Department of Treasury, IRS and Health and Human Services (HHS) concur with the DOL’s guidance provided in this new notice.
As discussed in our recent blog, the government indicated in the Final Rule published in 2020, that the period between March 1, 2020 through the end of the Outbreak Period (60 days after the announced end of the COVID-19 National Emergency) must be disregarded for purposes of determining COBRA, HIPAA special enrollment/COBRA notifications, claims and appeals deadlines. However, according to the 2020 Final Rule, this period may not extend beyond one year. Many questioned how the one-year expiration applied to the deadlines, whether it applies to each individual, or whether it expires on February 28, 2021 for all (one year after March 1, 2020).
Clarification of the One-Year Deadline
For most of the deadlines, including COBRA, the DOL has now clarified that the one-year expiration is based on a person-by-person deadline. The DOL clarifies the periods are disregarded “until the earlier of (a) 1 year from the date they were first eligible for relief, or (b) 60 days after the announced end of the National Emergency (the end of the Outbreak Period). On the applicable date, the timeframes for individuals and plans with periods that were previously disregarded under the Notices will resume. In no case will a disregarded period exceed 1 year.”
The DOL provides examples to illustrate the one-year limitation. Below are two of their examples.
- A qualified beneficiary would have been required to make a COBRA election by March 1, 2020. Because the Outbreak Period is unknown at this time, the one-year limitation applies so the election is delayed until February 28, 2021.
- A qualified beneficiary would have been required to make a COBRA election by March 1, 2021. The deadline for this individual to elect COBRA is the earlier of one year from the original deadline, March 1, 2022, or the end of the Outbreak Period.
Clarification Still Needed for COBRA Premium Payments
COBRA premium deadlines – one issue that needs further clarification are the deadlines for COBRA premium payments. The DOL indicates “the disregarded period for individual actions ‘required or permitted’ is expressly limited by statute to a period of one year from the date the individual action would otherwise have been required or permitted.” Because COBRA premium payments are individual actions with different deadlines, this appears to imply that each individual COBRA premium payment deadline is determined separately according to these timeframes. Previously, many believed that when the COBRA participant makes their first payment, they are required to make all prior missed payments, as well. With this new guidance, this may not be the case and the payments may be able to start monthly prospectively. For example, if a COBRA participant made their last payment on March 31, 2020, their next payment was due April 30, 2020. They have until April 30, 2021 to make this payment. Must they make all prior late payments as of April 30, 2021, or can they pay May 31, 2020 premium payment by May 31, 2021, and so forth? Hopefully, the DOL will issue clarification soon.
Plan Deadlines, not Individual Deadlines
Any deadlines imposed by a plan that applies to all plan participants is also extended to the earlier of (a) one year from the date they were first eligible for relief, or (b) the end of the Outbreak Period.
Health Flexible Spending Account (HFSA) claims submission deadline – for HFSA claims, last year the HFSA claims submission deadline was extended where the run-out period for the plan ended on or after March 1, 2020. The run-out period should end one year after the end of the original run-out period for plan years beginning in 2019 (could apply to off-calendar-year plan years beginning in 2018, as well). For example, if a 2019 calendar-year HFSA with no grace period, had a run-out period that ended on March 31, 2020, the new run-out period for 2019 HFSA expenses ends on March 31, 2021. In this situation, employees with money remaining in their 2019 HFSA account have until March 31, 2021 to submit expenses incurred in 2019. They also have additional time to appeal a claim for this period, as well. Most HFSA participants have submitted their 2019 claims already so this should not impact many HFSA participants.
Plan Administrator and Fiduciary Responsibilities
In Notice 2021-01, the DOL encourages plan administrators or other responsible plan fiduciaries to do the following:
- Act reasonably, prudently, and in the interest of workers and their families – the DOL goes as far as to say that “plan fiduciaries should make reasonable accommodations to prevent loss of or undue delay in payment of benefits in such cases and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established timeframes.” Employers and service providers must follow the prescribed COBRA timeframes, otherwise, they may be at risk for not doing so. If there are exceptions, employers should make sure their insurance carriers and/or third-party administrators will approve the exceptions. Because some individuals may not be notified timely due to the late issuance of this guidance, exceptions to typical deadlines should be assessed and evaluated with all parties.
- Notify affected individuals who are close to losing their benefits or rights under a plan – notifications should also be amended and provided to affected individuals if they previously failed to provide accurate information regarding the deadlines for taking action, e.g., COBRA election notices or claims procedure notices.
- Inform affected individuals of Marketplaces – the DOL strongly suggests that employers and plan administrators notify affected individuals in ERISA group health plans of the coverage options that may be available to them in the Health Insurance Marketplace in their state or under the federal program, healthcare.gov. For a list of states that operate their own Marketplace platforms, individuals can go to: https://www.healthcare.gov/marketplace-in-your-state/.
The DOL acknowledges that there may be circumstances where employers or service providers may not be able to comply with timeframes and/or notification requirements. Specifically, the DOL indicated in the notice that “in the case of fiduciaries who have acted in good faith and with reasonable diligence under the circumstances, the DOL’s approach to enforcement will be marked by an emphasis on compliance assistance and includes grace periods and other relief.”
Although it is certainly welcome to have this guidance released before March 1, 2021, the guidance presents challenges for service providers. Having to calculate the deadlines for each individual may be difficult based on administration systems. Also, based on the new guidance, some affected individuals’ deadlines are quickly approaching the one-year period, so employers and plan administrators need to act quickly with notifications for these individuals and assess any applicable missed deadlines.
Employers should speak with their service providers and benefits attorneys immediately to ensure that they will comply with this new guidance. TRI-AD is working to incorporate these deadline extensions and notifications into our operational processes. We are also developing updated communications to affected individuals.
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