On April 28, 2020, the U.S. Department of Labor (DOL) and Internal Revenue Service (IRS) issued a joint rule titled Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak. The rule is in response to President Trump’s March 13th Proclamation of National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak, in which he declared a national emergency beginning March 1, 2020.
This rule pauses a number of deadlines related to COBRA continuation coverage, health and disability claims submissions and appeal rights, and HIPAA special enrollment periods for group health plans. The rule applies retroactively, requiring plans to put deadlines on hold starting March 1, 2020 through the end of the “outbreak period,” defined as 60 days following the end of the national emergency, or any other date announced by the DOL and IRS in subsequent guidance.
Which Timeframes Are Affected?
The rule applies to all of the following timeframes.
COBRA Continuation Coverage
- 60-day election period
- 45-day initial premium payment deadline
- 30-day grace period for monthly COBRA premium payments
- 60-day period for individuals to provide notice of a qualifying event to the employer, or notice of a disability determination
- 14-day period for plans to provide election notices to qualified beneficiaries (44 days if the employer is the plan administrator)
Health and Disability Claims
- Claim filing deadlines (set by the plan)
- 180-day period for participants to appeal claim denials
- Deadlines for requesting external review and related timeframes
HIPAA Special Enrollment
- 60-day period allowing enrollment after loss of CHIP or Medicaid coverage
- 30-day period allowing enrollment due to loss of other coverage, or life events such as marriage, birth, adoption, or placement for adoption
What Do I Need to Do to Comply?
At this time, the guidance doesn’t include specific notices or actions employers or administrators must take. Each employer and administrator needs to determine how they can best comply with the rule for each affected deadline.
Non-excepted group health plans, including major medical plans and health reimbursement arrangements (HRAs), must accept applications for group health plan coverage made by employees beyond the special enrollment deadline. Dental, vision, and many health care flexible spending account (FSA) plans, are not subject to HIPAA special enrollment rules and therefore may continue to enforce enrollment deadlines. However, the sweeping language of the rule suggests those plans will not be penalized for allowing more generous enrollment time periods. Insurance carriers should accept late enrollees even though they are not directly regulated by the notice.
Employers and administrators must also accept late COBRA elections and reinstate cancelled coverage if payment is received beyond a deadline that fell on or after March 1, 2020. Though it is not entirely clear how this affects coverage, an example provided in the regulation suggests that employers, administrators, and insurance carriers will not be allowed to terminate coverage during the outbreak period solely because an individual is unable to pay by the end of the original COBRA grace period.
Finally, health plans subject to ERISA, including HRAs and health care FSAs, need to allow claims to be approved beyond the plan’s claim submission deadlines, typically referred to as runout periods. The rule does not require plan amendments, but instead states that plans cannot enforce their claim submission deadlines during the outbreak period. Claims that would be denied because they were submitted after the end of a runout period must be approved if otherwise eligible. The rule also extends the typical 180-day period in which a participant can appeal a denied claim, and the periods during which a participant can request external review under federal or state external review procedures.
How Do I Calculate the Extension?
The extension under this rule works by essentially pausing all deadlines listed above until the end of the outbreak period – 60 days after the end of the national emergency, or a date indicated in later guidance by the DOL and IRS. Following the examples provided in the rule, if a person was provided a COBRA election notice on April 1, 2020, the outbreak period is disregarded for the purposes of calculating the deadline for the qualified beneficiary to elect COBRA.
For now, since we don’t know when the national emergency will end, no deadline can be enforced. If we later learn, for instance, that the national emergency is set to end on May 31, 2020 then the outbreak period would end 60 days later, on July 30, 2020. The typical 60-day election period would then begin to run, expiring September 28, 2020.
A similar calculation would need to be done for individuals who were in one of the periods affected by the extension when the national emergency started. For example, if a qualified beneficiary elected COBRA on February 18, 2020, their initial premium payment would have been due 45 days later, on April 3rd. 11 days of the payment period elapsed prior to March 1, 2020, so once the outbreak period has passed, the payment period would start again and end 34 days later (45 days minus the 11 days that passed pre-outbreak period).
As of today, there is no indication of when the national emergency will end, and if it will end at the same time across the U.S. The DOL and IRS anticipate issuing future guidance if they determine a specific date to mark the end of the outbreak period, or to address how plans can apply different outbreak periods to employees living in different parts of the country, if needed.
What if I Already Took Action Based on a Deadline that Passed Before this Notice?
The rule does not address how a plan should manage retroactive application; further clarification from the DOL and IRS on this question would be helpful and we will update this article if future guidance is provided. Until then, we think it is advisable for an employer to work with their insurance carrier to provide coverage for an individual whose HIPAA special enrollment period ended on or after March 1, and whose request was denied because it was received beyond the deadline.
Similarly, if a qualified beneficiary’s COBRA election period would have ended on or after March 1 and an election form and initial payment were received beyond the initial payment deadline, we think plans have an obligation to secure COBRA coverage based on this rule. However, individuals who were denied COBRA coverage or lost COBRA coverage due to missed deadlines may have already enrolled in other coverage and no longer want COBRA. Although not required by the notice, employers may want to reach out to those former qualified beneficiaries and notify them of the extension of time to elect or pay, and provide COBRA coverage upon request.
Future Impact of the Rule
The DOL and IRS’ commentary throughout the guidance make it clear that employers and plans should read the regulation broadly to assist employees who are struggling during this time. For example, the rule acknowledges a lack of jurisdiction over non-federal governmental plans but urges their compliance with this guidance regardless.
This broad language could create a risk for employers down the road, especially due to issues with securing COBRA payments. If the DOL and IRS intend to require plans to provide coverage indefinitely without assurance of payment from a qualified beneficiary, there will be a high likelihood of default. Without any clarity around who bears the risk of unpaid coverage, it seems plausible that insurance companies will turn to employers as the contractually obligated party for payment. Until more guidance is issued by the DOL and IRS, employers should consider reaching out to their insurance carrier to determine how their carrier is handling late enrollments, late coverage reinstatements under COBRA, and retroactive terminations during this time.