This week, the U.S. Department of Labor, Internal Revenue Service and Department of Treasury jointly issued a Final Rule extending certain timeframes for employee benefit plans, participants and beneficiaries impacted by the COVID-19 pandemic. The Final Rule extends timeframes that would otherwise apply under ERISA and the Internal Revenue Code during the nationally declared State of Emergency.
Importantly, the Final Rule extends the timeframes for
- electing and paying for COBRA continuation coverage;
- issuing COBRA notices;
- enrolling in coverage due to a HIPAA special enrollment event;
- filing benefit plan claims and appeals.
Background
On March 13, 2020, President Trump declared that the COVID-19 pandemic created a National Emergency. The National Emergency declaration resulted in emergency declarations for every state, territory and possession of the United States effective March 1, 2020.
The government agencies responsible for employee benefit plan compliance have recognized the hardships encountered by plan participants, beneficiaries and sponsors during the National Emergency. To ease the hardships, the agencies issued guidance in the form of a Final Rule extending plan timeframes otherwise applicable during the National Emergency.
The Final Rule establishes a new time convention beginning with the start of the National Emergency (March 1, 2020) and ending 60 days after the end of the National Emergency (date yet to be determined). This period is called the “Outbreak Period.” Employee benefit plans subject to ERISA and/or the Internal Revenue Code must disregard notice and payment deadlines occurring during the Outbreak Period. In effect, the Outbreak Period is completely disregarded when calculating certain benefit plan timeframes.
The Final Rule extends the following deadlines occurring during the Outbreak Period:
- the 60-day COBRA election period;
- the 45- or 30-day COBRA premium payment period;
- the employer/plan administrator 30/14 day COBRA election notice period;
- the 30- or 60- day HIPAA special enrollment period; and
- the time periods for filing benefit claims and appeals.
COBRA
The COBRA rules give qualified beneficiaries 60 days to elect continuation coverage after the loss of group health coverage or the date the plan provides a COBRA election notice, if later. Qualified beneficiaries must be given at least 45 days to pay for coverage after a COBRA election is made. On an ongoing basis, qualified beneficiaries can be required to pay the premium for COBRA coverage by the first of the month for that month of coverage, but they must be offered a 30 day grace period for payment to be received. There are also timeframes under COBRA for requesting an extension of coverage due to disability and for employers to provide notices of COBRA rights.
New Timing Rules
COBRA Election. Any COBRA beneficiary who has a qualifying event during the Outbreak Period will have 60 days after the end of the Outbreak Period to elect COBRA.
COBRA Payment. Any premium due during any month in the Outbreak Period will be tolled and payment will be considered timely if it is made 30 days after the end of the Outbreak Period. For initial premium payments due during the Outbreak Period, continuants will have 45 days from the end of the Outbreak Period to pay.
COBRA Notices. Plan sponsors will have an extension of time to provide COBRA election notices otherwise due during the Outbreak Period.
Special Enrollment Timeframes
HIPAA requires group health plans to offer a special enrollment period upon the occurrence of certain life events. If a person becomes a dependent of an eligible employee by birth, marriage, adoption or placement for adoption, a group health plan subject to HIPAA must allow the dependent to enroll in the plan if the enrollment is requested within 30 days (or 60 days if the special enrollment is due to loss of certain government health coverage programs).
New Timing Rules
Special Enrollment Requests. If a participant experiences a HIPAA special enrollment event during the Outbreak Period, the participant will have 30 (or 60) days after the end of the Outbreak Period to request plan enrollment.
Claims Procedure Timeframes
ERISA-covered group health and disability plans must allow participants a certain amount of time to file benefit claims. They also must allow claimants at least 180 days following receipt of an adverse benefit determination to appeal that determination.
New Timing Rules
Filing Claims and Appeals. Plan participants will have an extension of time to file a claim or request an appeal otherwise due during the Outbreak Period.
Summary
This new guidance may be welcome news for plan participants but will likely create issues for plan sponsors. The extension of the COBRA timeframes and special enrollment events must be coordinated with insurers to allow enrollment/disenrollment after the standard time periods. Employers will have to consider how they will handle COBRA continuants who use coverage during the Outbreak Period but do not pay for the COBRA coverage timely when the Outbreak Period Ends. They will also have to discuss retroactive enrollment/disenrollment options with their carriers.
All of the timeframes required under the Final Rule hinge on the date of the end of the National Emergency declaration which, as of the date of this writing, has not been declared. The Final Rule also indicates that it is possible for the Outbreak Period end date to differ based on location in the country. Therefore, there is not yet clarity as to the exact timing required under the Final Rule.
The guidance may be accessed by clicking below.
If you use BAS and Cobra Control Services for your COBRA and/or benefit plan administration, please be assured that BAS is keeping up with federal guidance. We will be ready to administer your plans in accordance with the new rules.
