By: HUB’s EB Compliance Team
As we approach peak renewal season, it’s important to remember that we’re still in the COVID-19 Outbreak Period (“OP”). The federal government has greatly expanded election opportunities under COBRA and HIPAA Special Enrollment Rights, as we described earlier here. Employers should remember this, especially if they are changing vendors and carriers. The COVID-19 Relief for COBRA election periods and HIPAA Special Enrollment Rights for newborns and newly adopted children can create additional headaches if employers aren’t careful.
If employers are changing COBRA vendors as part of their renewal, the new vendor MUST receive the historical election, enrollment and payment data all the way back to at least the beginning of 2020. There may be potential COBRA beneficiaries who are still able to elect and pay for COBRA due to the OP, so new vendors need to know about them. Likewise, there could be individuals who previously elected COBRA, but as part of the OP, have stopped paying their premiums. In this case, new vendors will need to know when payments have been made through. Here are two examples:
John worked for Beatles Corp until 5/17/2020 and became eligible for COBRA effective 6/1. Beatles Corp uses ABC to administer their COBRA, however they’re moving this business to XYZ effective 10/1/2020 when their plan renews. ABC properly sent John his COBRA election notice, but he hasn’t elected COBRA as of now. XYZ must be aware than John has the ability to elect COBRA retroactive to 6/1 when they take over the COBRA administration.
Paul worked for Beatles Corp until 11/22/2019 and elected COBRA effective 12/1/2019. Paul made all premium payments through June 2020 but has now stopped making payments. When XYZ takes over the COBRA administration they must be aware that Paul’s COBRA will need to be reinstated back to 7/1 if he properly makes payments as allowed by the OP delay.
Medical Carriers – COBRA
Employers who are changing medical carriers as part of their renewals need to make sure the old carriers are equipped to accept retroactive enrollments related to the OP while coverage with that carrier was in force. Likewise, they’ll need to make sure new medical carriers are equipped to accept delayed enrollments related to the OP. Here are two examples, both assuming that Beatles Corp moved their medical from Carrier A to Carrier B effective with their 10/1 renewal.
George worked for Beatles Corp until 7/11/2020 and became eligible for COBRA effective 8/1. George hasn’t elected COBRA yet due to the OP, but decides to elect and pay for COBRA retroactive to 8/1 in November (assuming George’s extended election period due to the OP hasn’t ended).
- Carrier A needs to be equipped to reinstate George’s coverage for August and September
- Carrier B needs to be equipped to add George’s coverage starting in October
- Note the added complexity since Beatles Corp is changing both medical carriers and COBRA vendors with their renewal – Beatles Corp must determine whether premium payments for coverage before 10/1 will go to ABC (old COBRA vendor) or XYZ (new COBRA vendor)
Ringo worked for Beatles Corp until 1/17/2020 and became eligible for COBRA effective 2/1. Ringo elected COBRA and made timely premium payments for February, March, April, May and June but has not made any since. Assume the OP officially ends on 12/31, which then gives Ringo 30 days to make payments. On January 10, 2021 Ringo makes COBRA payments for July 2020 – January 2021.
- Carrier A needs to be equipped to reinstate Ringo’s coverage for July – September
- Carrier B needs to be equipped to add Ringo’s coverage starting in October
Medical Carriers – Special Enrollment Rights
The OP may also cause issues related to HIPAA Special Enrollment rights related to the birth or adoption of a child. These are the only events where coverage must be effective retroactive to the date of the birth or adoption. Rights related to marriage and gaining or losing Medicaid eligibility only impact coverage going forward. Here’s an example:
Pete Best (the drummer before Ringo) works for Beatles Corp and is enrolled in their coverage along with his spouse. They have a child on 6/21/2020 but don’t enroll their child until 11/14/2020 (assuming the OP hasn’t ended by then). Coverage for the child needs to be effective retroactive to 6/21.
- Carrier A needs to be equipped to add the child from 6/21 to 9/30
- Carrier B needs to be equipped to add the child starting on 10/1
- Pete will of course need to pay these retro premiums to get the child’s claims paid
Employers should be aware of these potential issues and work with their HUB Consultant, carriers, and vendors to make sure the carriers and vendors have all the necessary information to administer these and other OP-related issues (such as claims filing delays, as detailed in our earlier article or cafeteria plan relief as we noted here). The above are just a few examples of how these issues may come into play. Gathering the data and preparing now will allow an employer to avoid headaches if and when these issues pop up down the road.
For the latest information on the COVID-19 crisis and its effect on employers, please keep visiting HUB’s Coronavirus Resource Center. If you have any questions, please contact your HUB Advisor. You can also view more compliance articles in our Compliance Directory.
NOTICE OF DISCLAIMER
The information herein is intended to be educational only and is based on information that is generally available. HUB International makes no representation or warranty as to its accuracy and is not obligated to update the information should it change in the future. The information is not intended to be legal or tax advice. Consult your attorney and/or professional advisor as to your organization’s specific circumstances and legal, tax or other requirements.