On May 4, 2020, the Department of the Treasury/IRS and the Department of Labor/Employee Benefits Security Administration jointly published a notification in the Federal Register that temporarily stops the clock on eight deadlines applicable to participants, beneficiaries, and claimants of group health plans, disability and other welfare plans, and pension plans, because of COVID-19.
Effective immediately, the clock will be frozen from March 1, 2020, the date President Trump first invoked national emergency powers because of COVID-19, until 60 days after the announced end of said National Emergency, or such other end date announced by the DOL and IRS in a future notification. This period is called the Outbreak Period.
Currently the federal National Emergency declaration expires on June 29, 2020. If that holds, the Outbreak Period may end on August 28, 2020, and the clock will start ticking on deadlines previously held in abeyance — unless the IRS and EBSA set a different end date.
Employers with twenty or more employees must provide participants with rights to continue group health insurance after the loss of coverage due to a qualifying event, as mandated by the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) amendments to ERISA. Although the Health Insurance Portability and Accountability Act (HIPAA) is now more commonly known for its confidentiality rules, it also requires employer group health plans to provide a special enrollment to individuals who have certain life events. Both of these laws contain specific time frames within which actions must be taken or rights are lost.
Concerned that the COVID-19 National Emergency may be creating problems with meeting COBRA and HIPAA deadlines and other timetables in benefit plans, and wanting to minimize the possibility of individuals losing benefits, the DOL and IRS provided relief in this Notification, consistent with amendments to ERISA in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
Extended Participant Deadlines and Timeframes
The following deadlines/timeframes impacting various group welfare plans will be disregarded, or postponed, during the Outbreak Period and, instead, will start when the Outbreak Period ends:
- The 30-day period (or 60-day period under the Children’s Health Insurance Program Reauthorization Act of 2009) to request special enrollment following the loss of an employee’s or their dependent’s coverage under another plan, or the date when a person becomes a dependent of an eligible employee by birth, marriage, adoption, or placement for adoption.
- The 60-day period for a participant to elect COBRA continuation coverage under a group health plan.
- The deadlines for making COBRA premium payments. This applies to the first COBRA payment, which is due within 45 days after the timely election of COBRA continuation coverage, and all subsequent COBRA payments, which generally are not late if paid within 30 days after the first day of the period for which the payment is made. Participants who delay payment of premiums, as allowed by this Notification, must eventually pay the premiums incurred during the extension / Outbreak Period in one fell-swoop, when they become due under this new rule. That could make for quite a large payment, so it would be wise to save up for it.
- The timeframes within which individuals must notify their plan of a qualifying event (employee’s death, termination or reduction of hours, divorce or legal separation, becoming eligible for Medicare, end of a dependent child’s eligibility, employer’s Chapter 11 bankruptcy from whom the covered employee retired), or a determination of a disability.
- The date within which individuals may file a benefit claim under the plan’s claims procedure.
- The date within which claimants may file an appeal of an adverse benefit determination under the plan’s claims procedure. Prior to the Notification, these deadlines are a minimum of 180 days after receipt of an adverse group health benefit determination, and a minimum of 60 day after an adverse benefit determination for any other welfare plan and for pension plans.
- The date within which claimants may file a request for a State or Federal external review after receipt of an adverse benefit determination or final internal adverse benefit determination.
- The date within which a claimant may file information to perfect a request for State or Federal external review upon a finding that the request was not complete.
There are several examples in the Notification demonstrating how the Outbreak Period would apply to many of these extended deadlines and timeframes, providing some additional guidance about how this will operate.
The Notification also states that benefits coverage cannot be denied during the Outbreak Period, and that plans and insurers may make payments for benefits and services participants received during the Outbreak Period on a retroactive basis. This may leave health care providers waiting longer than usual to be paid for products and services rendered.
Extended Cobra Election Notice Deadline
Typically, COBRA election notices must be issued by group health plans, their sponsors, or administrators to certain adult participants within 14 days after the loss of – or in some cases, after the plan learns of an event which should result in the loss of – coverage due to a qualifying event. This Notification allows that deadline to be disregarded during the Outbreak Period, meaning issuing COBRA election notices can be postponed until up to 14 days after the Outbreak Period ends.
This relief is particularly helpful for employers forced to suddenly close or significantly downsize their businesses due to government orders. Those who were not so affected likely sent COBRA election notices within the usual deadline for qualifying events occurring between March 1 and May 4. Some employers may choose to continue to send COBRA election notices under the usual deadline rather than rely on the relief provided under this Notification. After all, just because COBRA election notices can be postponed under this new rule does not mean they must be postponed.
The unknown end date of the Outbreak Period makes it impossible to include accurate deadline dates in COBRA election notices that might be sent out right now. In addition, notices issued before the Notification came out have deadlines in them that are no longer accurate. What should employers do?
Most employers use the DOL’s model COBRA election notice, even though it is not required. However, the Notification is silent about whether a revised model election notice reflecting the Outbreak Period’s extensions will be forthcoming.
Coincidentally, the DOL issued an update of the model COBRA election form on May 1, 2020. This revised model was in the works before COVID-19 became a national emergency and for the purpose of providing additional information about Medicare enrollment. It does not address the Outbreak Period relief now available under the Notification published on May 4.
For now, employers and plan administrators and sponsors are left on their own to modify COBRA election notices to inform recipients of their right to additional time— and to notify individuals who have already received such notices of the additional time they will have to make elections and pay premiums — if they want to do so now. If you choose to modify your existing COBRA election notice, keep in mind that the new deadlines can only be described in general terms because the end of the Outbreak Period is not currently known.
Additional information is available in COVID-19 FAQs for Participants and Beneficiaries available on the EBSA’s website. For instance, Question 10 advises that the deadline to apply for special enrollment in an individual health plan within 60 days of losing employer sponsored coverage has not been extended.
The abundance of new laws, rules, guidances, and notifications addressing COVID-19 pandemic concerns seems to be never-ending and constantly evolving. It can easily leave employers and employees dazed and confused. Don’t be shy about reaching out for help from trusted counsel. Even then, don’t be surprised if what you are told one moment is different from what you are told the next. It’s the nature of our world right now.