On May 4th, the Employee Benefits Security Administration (EBSA), a division of the Department of Labor, and the IRS filed a joint notice which extends numerous deadlines applicable to employee benefit plans that are subject to ERISA. Health and Human Services (HHS) concurred with the notice thus extending its parameters to non-federal governmental plans as well.
Plans impacted by the notice are:
- Group health plans;
- Disability plans;
- Other employee welfare benefit plans; and
- Employee pension plans (defined contribution and defined benefit plans).
On March 13, 2020, President Trump declared a national emergency related to COVID-19 and established that the emergency declaration would be effective retroactive to March 1, 2020. A national emergency declaration gives authority to the Secretaries of the Treasury and Labor to postpone up to one year any deadline under the IRS or ERISA. The first action by the agencies was published in Notice 2020-23 which extended deadlines for “time sensitive actions” and was outlined in Diversified Group’s Blog Post, dated 4/20/2020, titled “IRS Notice 2020-23 Extends Some Tax Filing Deadlines.”
The joint agency notice released on May 4th requires plans to disregard the period from March 1, 2020 and ending 60 days following the termination of the COVID-19 national emergency (this is referred to the “Outbreak Period”) when determining deadlines for:
- Enrolling in the plan under a HIPAA special enrollment event;
- Electing COBRA continuation coverage;
- Making COBRA premium payments;
- Notifying the plan of a COBRA qualifying event or determination of a disability;
- Filing an initial benefit claim;
- Filing an appeal of an adverse benefit determination; and
- Requesting an external review after receipt of a final adverse benefit determination.
It is important to note that the end of the national emergency has not yet been announced. The agencies have indicated that the end of the national emergency may vary for different parts of the country.
Therefore, when calculating any time period for the effected events above, it is as if any days between March 1st and 60 days following the end of the national emergency are ignored; March 1st skips directly to a date in the future (to be determined once the national emergency is lifted) and the timeframe clock restarts.
For illustrative purposes for each covered situation, we will assume the national emergency ends on April 30, 2020 with the Outbreak Period ending on June 29, 2020 (60 days following the termination of the COVID-19 national emergency).
HIPAA Special Enrollment Periods:
HIPAA specifies various events that qualify an individual for a mid-year special enrollment under a health plan (i.e., loss of other coverage, termination of Medicaid or CHIP coverage, having or becoming a new dependent). Qualified individuals must request enrollment within 30 days or 31 days depending upon the plan document (or 60 days in the case of Medicaid or CHIP) of the qualifying event.
Example: An individual is eligible for the group health plan but previously declined coverage. On March 31, 2020 the individual gave birth and would like to enroll herself and the child into the employer’s plan. Using the assumptions above, the Outbreak Period is disregarded for purposes of determining the special enrollment request period for this individual. The individual and the child qualify for special enrollment as of the child’s birth date. Since the Outbreak Period is ignored, the special enrollment right would allow the individual to notify the plan by July 29th (without the national emergency, the notification would have had to been made by April 30th ). July 29th is 30 days following the end of the Outbreak Period and as long as all back premiums are paid back to the enrollment date of March 31st, the employee and child will be enrolled.
Electing COBRA Continuation:
Group health plans must allow qualified beneficiaries under COBRA to elect continuation coverage within a 60 day “election period” which begins on the date coverage terminates because of a qualifying event.
Example: An individual experiences a reduction of hours due to COVID-19 and becomes ineligible for the group health plan on April 1, 2020. This individual is eligible to elect COBRA coverage under the employer’s plan. Since the Outbreak Period is disregarded for purposes of determining the individual’s COBRA election period, the last day this individual can elect COBRA is 60 days after June 29th, the end of the Outbreak Period, which is August 28, 2020.
Making COBRA Premium Payments:
Individuals electing COBRA typically are required to pay their COBRA premium within 30 days of the due date.
Example: A former employee elected COBRA on January 1, 2020. Premiums are due on the first of each month with no later than a 30 day grace period. Beginning in March, the former employee fails to pay the premium every month during the Outbreak Period. As of July 1, the former employee has made no premium payment for March, April, May, or June. Since the Outbreak Period is disregarded for purposes of determining whether COBRA payments are timely, payments made by 30 days after the Outbreak Period (July 29 is 30 days after the end of the Outbreak Period in our example) for March, April, May, and June are considered timely. If the former employee pays all the back premium, the individual is entitled to COBRA for those months. For purposes of this premium payment, the former employee cannot pick and choose which prior months to pay; all premium is applied to the first month for which premium was not paid.
COBRA Notice of Qualifying Event:
Covered employees and qualified beneficiaries must notify the plan administrator of certain qualifying events (divorce, loss of dependent status, or determined to be disabled by Social Security) within 60 days of the date of the qualifying event.
Example: An employee and spouse divorce on April 1, 2020. Normally, the spouse has 60 days to notify the plan administrator of the qualifying event in order to elect COBRA. With the assumption that the Outbreak Period ends on June 29, 2020, the Spouse has 60 days from then to notify the plan sponsor of the qualifying event, or August 28, 2020.
Filing an Initial Benefit Claim:
A plan’s claim procedures specifies the period in which an individual may file a benefit claim. Typically, plans allow for a period of 365 days, however, plans may vary in their terms.
Example: A participant received covered medical services on March 1, 2020 but does not submit the claim until April 1, 2021. The plan requires claims to be submitted within 365 days of treatment. Assuming the Outbreak Period ends on June 29, 2020, the participant’s claim is considered timely filed if submitted by June 29, 2021 which is 365 days following the end of the Outbreak Period.
A plan’s claim procedures specifies the period in which an individual may appeal an adverse benefit determination. The minimum period is 180 days following receipt of the notification of the adverse determination.
Example: A participant receives an adverse benefit determination from his health plan on January 28, 2020. The notice provides a 180 day period for appeal. Assuming the Outbreak Period ends on June 29, 2020, the participant may file an appeal within 148 days (180 days – 32 days between January 28 and March 1) of June 29, 2020, or by November 24, 2020.
External Appeals Deadlines:
Group health plans must allow claimants four months to request external review of an adverse benefit determination. The external review process is typically overseen by the plan’s claims administrator and contracted independent review organizations (IROs). The plan administrator will want to confirm that the IROs will disregard the Outbreak Period in determining timeframes applicable to external reviews.
Diversified Group’s Response – this is very new and fluid at the moment. With several moving parts, Diversified Group has assembled a cross-departmental team to address all impacts to our administrative process and our client’s plans. Some areas we are currently working on include:
- We are working closely with our ERISA advisors to ensure that we are covering all aspects of these changes correctly, adequately and efficiently;
- Diversified Group is currently working with our Stop Loss Partners to determine their stance on the joint agency ruling;
- Amendments are being prepared to add language in plan documents to include the extension of certain plan deadlines;
- We will be adding a one page COBRA notification to all COBRA mailings explaining the additional timeframes to our COBRA participants;
- We are exploring adding new language regarding appeals and claims filing to our employee facing Explanation of Benefits (EOB);
- We are investigating the impact, if any, on Flexible Spending Accounts (run out periods ending during the Outbreak Period);
- The extent to which differing Outbreak Period end dates occur for different parts of the country and how they may impact the timeframe extensions.
We will continue to update you as more information becomes available; please feel free to contact your Diversified Sales Rep or Account Executive with any questions at (888) 322-2524.