By: HUB’s EB Compliance Team
Even though the COVID-19 pandemic is not over, the extended time for completing COBRA, claims procedures, and special enrollment events is about to end. As we detailed last May, the IRS and Department of Labor (“DOL”) provided generous relief to participants and some limited relief to plan fiduciaries. However, that relief began on March 1, 2020 and has a legal limit of one year. This means the relief associated with these deadlines is expected to come to an end on February 28, 2021.
Under Section 518 of ERISA and Section 7508A of the Internal Revenue Code, the IRS and DOL have the authority to delay certain deadlines for up to one-year in response to a Presidentially-declared disaster. These regulations and this DOL guidance announced this relief due to the COVID-19 pandemic. Under that guidance, the relief would end on the earlier of (1) 60 days after the end of the disaster declaration or (2) February 28, 2021 (the “Outbreak Period”). At the time, most everyone expected the February 28, 2021 date would not come into play, but we are almost there.
The additional time periods for the following deadlines are ending:
- For COBRA:
- The 60-day COBRA election;
- The 45-day period to submit COBRA premiums, once COBRA coverage is elected (the initial payment);
- The 30-day grace period for a COBRA qualified beneficiary to make monthly COBRA premium payments (ongoing payments);
- The date for individuals to notify the plan of COBRA qualifying events (such as divorce or disability);
- For HIPAA special enrollment rights, the 30- or 60-day time period to make election changes; and
- The following ERISA claims deadlines:
- filing a claim;
- appealing a clam denial;
- requesting external review; and
- filing information needed to complete/perfect an external review request.
In addition, for employers, Employee Retirement Income Security Act of 1974 (“ERISA”) notice deadlines were also delayed during the Outbreak Period. Instead, employers were required to provide notices to employees as soon as they could. By now, most employers have likely distributed the required notices. However, going forward, employers should realize that they must comply with all of the ERISA required notices deadlines. Required notices generally include:
- Summaries of Benefits and Coverage
- ACA Notice of Marketplace Coverage Options
- ACA Grandfathered Status Notice
- ACA Patient Protection Disclosures
- HIPAA/ACA Wellness Program Notices (but note the EEOC Notice is not included)
- HIPAA Special Enrollment Rights Notice
- Children’s Health Insurance Premium Assistance Notice
- Women’s’ Health and Cancer Rights Act Notice
- Summary Plan Descriptions / Summaries of Material Modifications
- COBRA Initial Notices
- Summary Annual Reports
For employers, this means that any ERISA-required notices that were not distributed to employees must be sent out as soon as possible following February 28, 2021 (or before, if possible).
What Does This Mean for Participants?
The above-described relief was simply a “pause.” This means that on March 1, 2021 the deadline clocks restart (much like resetting your microwave clock after a power loss). Consider the following examples:
Example 1: Amelia experienced a COBRA qualifying event on April 30, 2020, but did not elect COBRA. The Outbreak Period will end on February 28, 2021. Amelia will have until April 29, 2021 to elect COBRA and another 45 days to pay her retroactive COBRA premiums. If Amelia pays for only part of her COBRA coverage, the payments will be applied to the earliest months first (i.e., starting with May 2020).
Example 2: Sean got married on February 2, 2020 – BEFORE the beginning of the Outbreak Period on March 1, 2020. Sean is entitled to enroll his spouse under a special enrollment right with 30 days’ notice. However, Sean has not done so. At the time the Outbreak Period began (on March 1, 2020) 28 of Sean’s 30 days had passed. Therefore, Sean only has two days left to add his spouse after the Outbreak Period ends. Why? Since the Outbreak Period began AFTER Sean’s marriage, the days prior to the effective date of the Outbreak Period will count toward Sean’s deadline. This means if Sean wants to add his spouse, he must do so by March 2, 2021.
What’s Not Ending?
It’s important to note that there is a second set of obligations are impacted by the Public Health Emergency declared by the Department of Health and Human Services (“HHS”). For example, group health plans will remain required to cover coronavirus testing and vaccines on a first dollar basis so long as HHS continues to declare the Coronavirus a “Public Health Emergency”. While the Public Health Emergency is currently set to expire on April 21, 2021, HHS has the authority to extend it for an additional 90 days each time it is about to expire. As a result, it is unlikely that the Public Health Emergency will be allowed to expire before COVID-19 is under control in the U.S.
What Could Happen?
While predicting future agency moves is challenging, it is possible that the IRS and DOL may identify other avenues to provide additional relief. However, that relief may look different than the relief described above. For example, the DOL could state that they will not assess penalties against employers who provide additional flexibility to their employees to submit COBRA elections. However, employers should work with their insurance carriers (for insured benefits) and third-party administrators and stop-loss carriers (for self-funded benefits) if they provide any flexibility that is not expressly required by law. It’s important to remember that allowing an employee to remain on a group health plan beyond his/her eligibility (as defined by the plan) may provide grounds for carriers/stop loss carriers to deny claims and/or seek reimbursement for paid claims.
It is also possible that the IRS and DOL may attempt to reinterpret the Outbreak Period relief, such as by saying that it applies on a participant-by-participant basis. This would extend the Outbreak Period for participants who had, for example, a COBRA qualifying event or special enrollment event during the Outbreak Period (like Amelia in Example 1 above), but not those whose event occurred before the Outbreak Period (like Sean in Example 2). However, the statutory language has a clear one-year limit, so any reinterpretation would still have to abide by that limit, at least on an individual basis. Additionally, Congress could potentially extend this 1-year period by legislation.
What Should Employers Do?
In addition to distributing the ERISA required notices (if not already completed), employers should consider communicating to employees and COBRA beneficiaries that their time is almost up. Further, COBRA beneficiaries may not be aware that their time to elect and pay is coming to an end. Therefore, employers should consider sending out supplemental communications.
If employers did not communicate the impending February 28, 2021 Outbreak Period expiration, they should make sure they do so now. Otherwise, employees, dependents, and COBRA beneficiaries could argue prior communications bound the employer to give them the full period of the Presidentially-declared disaster.
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.