On April 28, 2020, the Department of Labor (DOL), Internal Revenue Service (IRS) and Health and Human Services (HHS) issued a Final Rule which extends several employee benefit compliance deadlines. The agencies recognize there are numerous challenges for participants and group health plans to comply with certain benefit deadlines due to the COVID-19 pandemic. The relief is effective immediately and applies in the following areas:
- COBRA time frames
- HIPAA special enrollment time frames
- Claims procedure time frames (TRI-AD will provide additional information on this item soon in an upcoming article)
- External review process time frames (TRI-AD will provide additional information on this item soon in an upcoming article)
Deadline Extension
The deadline relief is based on the “end” of the COVID-19 outbreak (the National Emergency), which is unknown at this time. Specifically, group health plans, disability or other employee welfare benefit plans subject to ERISA must disregard for purposes of notifications, elections and certain claims, the period 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 notice. The agencies refer to this as the “Outbreak Period.” The agencies used an example of April 30, 2020 as the end of the National Emergency, so if this were the case, the Outbreak Period ends on June 29, 2020 (60 days after April 30). In our examples below, we assume a date for the end of the National Emergency as of April 30, 2020, but keep in mind, this date is unknown at this time.
COBRA Time Frames
Existing COBRA law has strict deadlines for employers, administrators, and individuals to meet certain notice and payment requirements. Below are the modified deadlines.
Employer Relief
- Employer providing the COBRA election notice – generally under the current law, employers must notify the plan administrator within 30 days (sometimes 60 days) of a COBRA qualifying event. Plan administrators have 14 days to provide a COBRA election notice. Employers and plan administrators will now disregard the Outbreak Period when determining the deadline for providing the COBRA election notice.
- Example – assume the end of the National Emergency was April 30, 2020 and the Outbreak Period ends on June 29, 2020. An employee is laid off on April 13, 2020, causing a COBRA qualifying event due to an immediate loss of health coverage. The employer has until July 29, 2020 (30 days after June 29, 2020) to notify the plan administrator of the qualifying event. If the employer notifies the plan administrator on July 29, 2020, the administrator has until August 12, 2020 (14 days after the notification date of July 29, 2020) to provide the COBRA election notice.
- TRI-AD Note – this extension of time will most likely benefit employers that are completely closed or lack resources to administer the COBRA election notifications due to the COVID-19 pandemic. Absent operational business impacts due to COVID-19 that influence an employer’s ability to comply with standard notification time frames, employers are anticipated to comply in good faith with the current standard notification time frames.
Participant Relief
- COBRA election period – under current law, employees losing health coverage and eligible for COBRA have 60 days to enroll in COBRA continuation coverage of their health benefits. Based on the new rules, affected individuals will have up to 60 days after the Outbreak Period to elect COBRA.
- Example – assume the end of the National Emergency was April 30, 2020 and an employee was sent a COBRA election notice on April 1, 2020. They may now elect COBRA continuation coverage up to 60 days after the end of the Outbreak Period, or August 28, 2020 (60 days after June 29, 2020). Coverage is retroactive to the affected individual’s original COBRA start date.
TRI-AD Note – it is not clear whether COBRA administrators need to send out additional notifications to previously notified COBRA members who failed to elect COBRA and whose election periods expired on or after March 1, 2020. Future COBRA election notices should include information of the new election and payment deadlines. Some qualified beneficiaries may not be eligible for COBRA if they obtained other coverage.
- COBRA payments – under current law, individuals first electing COBRA must make their first payment on or before 45 days after their COBRA election. Thereafter, the payments are due no later than 30 days after the premium due date. The new rules allow enrolled individuals to delay their payments until the appropriate deadline after the Outbreak Period. At the time they are required to make the premium payments, they may only pay partial coverage for consecutive months in which they incurred medical services.
- Example – an individual is enrolled in COBRA and their last COBRA premium payment was made on or before March 31, 2020 for March coverage and monthly payments are due at the beginning of each month. This individual could stop making premium payments until 30 days after the Outbreak Period, or July 29, 2020 if the end of the National Emergency was April 30, 2020. On or before July 29, 2020, the COBRA member could pay no premiums or pay for as many months as they wish to have coverage. For example, if the employee in our example delays payments for April, May, June, and July, and then opts to provide a payment for April and May coverage only on or before July 29, 2020, the plan must provide coverage for the months of April and May. The plan would not be obligated to cover benefits or services that occurred after May 2020.
TRI-AD Note – there are complicated issues due to the extension of COBRA premium payments. Because health coverage cannot be terminated by the insurer or the plan, is the employer responsible to pay the premiums for the coverage, or is the insurer required to continue coverage without payment? Based on the published guidance, it states “the insurer or plan may not deny coverage.” This appears to indicate that the insurer cannot stop coverage if it fails to receive the premium payments. Also, how is coverage reinstated for a former COBRA member if previously terminated due to a failure to make a timely payment? What if the former COBRA member is no longer eligible because they subsequently enrolled in other health coverage? These issues will need to be addressed by COBRA service providers, employers, and their insurers.
- Notification of a COBRA qualifying event – Employees and COBRA-qualified beneficiaries generally have 60 days to notify the employer or service provider of a divorce, legal separation or a dependent child ceasing to be a dependent (e.g., aging out). The deadline to inform employers or service providers if one of these events occurs has now been extended to 60 days after the Outbreak Period.
- Example – if a divorce occurred on April 1, 2020, under the old rules, the employee or COBRA qualified beneficiary was obligated to inform the employer or service provider of the divorce no later than May 31, 2020. Under the new rules, assuming the end of the National Emergency was April 30, 2020, the notification does not need to occur until August 28, 2020 (60 days after June 29, 2020, the end of the Outbreak Period).
TRI-AD Note – employers and/or service providers may need to modify their qualifying event processes/systems to allow additional time for employees to notify them of these qualifying events. All the revised election and payment deadlines afforded to the qualified beneficiaries will extend to ex-spouses and dependents, as well.
- Notification of a disability – generally, a COBRA member may expand their continuation coverage period to 29 months if they are disabled at any time during the first 60 days of continuation of coverage. The qualified beneficiary must notify the plan administrator 60 days from the later of 1) the date of Social Security Administration (SSA) disability determination, 2) the date of qualifying event, or 3) the date of loss of coverage; and within 18 months from the date of the qualifying event. Under the new rules, the deadline to notify the employer or service provider of a disability determination has been extended to 60 days after the Outbreak Period.
COBRA members must notify the employer or administrator within 30 days after the date the SSA determines the qualified beneficiary is no longer disabled. TRI-AD believes this deadline has been extended, but we welcome additional guidance.
HIPAA Special Enrollment Time Frames
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) provides special enrollment rights to employees/COBRA qualified beneficiaries on account of the following events:
- Addition of a dependent by birth, adoption, placement for adoption or marriage – if this event occurs, the employee may enroll the new dependent(s) in the group health plans.
- Loss of health coverage – if a dependent loses health coverage, the employee may enroll the dependent(s) in the group health plans.
- Termination of Medicaid or CHIP coverage or eligibility for employment assistance under Medicaid or CHIP – if a covered individual or a dependent is terminated under Medicaid or CHIP, or they become eligible for premium assistance, the employee/COBRA member may enroll in the employer’s group health plan.
Usually, employees/COBRA qualified beneficiaries have 30 days to notify the employer of these events (60 days in the case of the Medicaid /CHIP qualifying events). Under the new rules, assuming the National Emergency ended April 30, 2020, employees/COBRA members will have 30 or 60 days following June 29, 2020, the end of the Outbreak Period, to notify the plan administrators of any special enrollment rights.
- Example – an employee gets married on May 2, 2020. Assuming the National Emergency ended as of April 30, 2020 and an Outbreak Period ending on June 29, 2020, the employee must notify the employer of the marriage on or before July 29, 2020. Practically, if the employee wishes to cover their spouse in their plan, they will notify the employer of the marriage sooner rather than later to gain access to benefit services sooner.
TRI-AD Note – employers and/or service providers may need to modify their qualifying event processes/systems to allow additional time for employees to notify them of these qualifying events. However, most affected individuals will more than likely notify as soon as possible after the event to add or eliminate coverage for affected dependents.
Conclusion
These deadline changes are significant for employers, insurers and service providers. Affected employees and COBRA members should be notified of the changes to the notifications, election period and payments. At this time, there is no deadline date for the Outbreak Period because the end of the National Emergency has not been announced. Once this is announced, future notifications will also be required to inform affected individuals of the deadline. When the government determines the end of the National Emergency, TRI-AD will provide additional compliance information.
TRI-AD is working to incorporate these deadline extensions and notifications into our operational processes. We are also developing communications to affected individuals.
Below is the full URL/link to the Final Rule. NOTE: The Department of Labor’s website is only intermittently rendering the links below, likely due to increased site traffic. The text of the rule has also been published to the Federal Register (starts lower-right of Page 1).
Final Rule:
https://www.dol.gov/sites/dolgov/files/ebsa/temporary-postings/covid-19-final-rule.pdf
The DOL has published FAQs to help employee benefit plan participants and plan sponsors impacted by the COVID-19 pandemic understand their rights and responsibilities under ERISA. See the full URL/link below.
COVID-19 FAQs for Participants and Beneficiaries:
TRI-AD and our Associates’ suggestions or recommendations shall not constitute legal advice. No content on our website can be construed as tax or legal advice and TRI-AD may not be considered your legal counsel or tax advisor. Clients are encouraged to consult with their tax advisor and/or attorney to determine their legal rights, responsibilities, and liabilities. This includes the interpretation of any statute or regulation, federal, state or local; and/or its application to the clients’ business activities.