In coordination, the Department of Labor, the Department of Health and Human Services, and the Internal Revenue Service (collectively, the “Agencies”) have extended deadlines for multiple events important to health plan administration that will apply to ERISA-governed plans and governmental plans. Third-party administrators and COBRA administrators will need to program for these extensions, and consider revisions to COBRA notices regarding the grace period for premium payment.
The deadlines discussed below are extended for the “Outbreak Period,” which is defined as March 1, 2020, to 60 days after the announced end of the National Emergency. If a deadline falls within the Outbreak Period, then the Outbreak Period is disregarded in calculating the actual deadline for action. So, the running of the deadline is, effectively, paused during the Outbreak Period. The Agencies have also indicated that they may implement different end dates for certain parts of the country, if some areas have different end dates for their emergency period and, in that case, they will issue further guidance as to how to coordinate this rule around the varying Outbreak Period end dates.
COBRA Deadlines Extended.
COBRA election deadline extended. The guidance extends the normal 60-day period to elect COBRA continuation coverage by the length of the Outbreak Period. An employee who was terminated during the Outbreak Period―or less than 60 days prior to March 1, 2020―must be allowed an extra amount of time to elect COBRA coverage equal to the length of the Outbreak Period occurring after the COBRA qualifying event.
For example, if the National Emergency ended on June 30, then the Outbreak Period would be March 1 to August 29 (i.e., 60 days past the end of the National Emergency). So, an employee terminated on February 1, 2020, would have exhausted 29 days of the COBRA election period by March 1, and on August 29 (the end of the Outbreak Period in our example), that employee would still have 31 days remaining to elect COBRA. Thus, that employee would have until the end of September to elect COBRA, adding nearly 6 months to the normal deadline. An employee terminated during the Outbreak Period would have the full 60-day COBRA election period after the end of the Outbreak Period.
COBRA premium grace period extended. The same extension applies to deadlines to make COBRA premium payments. According to examples provided by the Agencies, a COBRA participant could delay all premium payments during the Outbreak Period (potentially several months―at this time it is at least March through June) and all those monthly premiums would be due 30 days (the normal COBRA grace period) after the end of the Outbreak Period. However, this would require several months of premium payments in the same month and could be very difficult for individuals. The federal guidance states that the COBRA participant would be eligible for coverage from the plan during the Outbreak Period even though the premiums might be paid 30 days afterward, and mandates that the insurance carrier provide retroactive coverage and retroactive claims payments when the premiums are ultimately received.
Retroactive termination of coverage possible; plans should consider notice to participants. The guidance provides that an insurance carrier can retroactively terminate coverage if the premiums are not received by the extended deadline. (This is the same process as usual, but the period subject to retroactive termination is potentially much longer.) The Agencies provided an example in which the COBRA participant paid only two out of four months of COBRA premiums by the extended deadline, and the insurance carrier and plan were obligated to provide coverage for the first two months of the Outbreak Period (March and April), but not obligated to cover benefits or services provided after those two months.
Plans should consider some type of notification to COBRA participants of the consequence of not paying the full COBRA premium at the end of the Outbreak Period (i.e., the plan will not cover claims from any month for which the premiums are not paid in full at the end of the Outbreak Period). It is important that COBRA participants understand this consequence, as failure to pay premiums could leave some claims unpaid for reimbursement to medical providers, who may look to recoup the costs from the patient.
COBRA notification deadlines. The deadline for COBRA participants to notify the Plan of a qualifying event under COBRA, or a determination of disability, is likewise extended. Plans also have an extension equal to the Outbreak Period to provide the notice of the right to elect COBRA.
Benefit Claims and Appeals.
Benefit claims. The Outbreak Period is disregarded in determining the deadline to file a benefit claim. The application of this extension can be different based on the plan’s claim deadline rules. For example, if a claim incurred during the plan year is due within 1 month of the end of the plan year and the plan year ends February 29, 2020, the claim is now due 1 month after the end of the Outbreak Period. The Agencies provided an example wherein medical services were received on March 1, 2020, and the claim for those services was due 365 days after the medical services were received. In that example, the claim was due 365 days after the end of the Outbreak Period. Based on that example, if medical services had been received on April 1, 2020, in that same plan, then the claims would still be due 365 days after the end of the Outbreak Period. The first month of the Outbreak Period, before the claim was incurred on April 1, is not added to the deadline because the deadline is merely paused for the portion of the Outbreak Period after the occurrence of the relevant event, such as receiving medical services.
Appeal deadline. The deadline to file an appeal of an adverse benefit determination (e.g., claim denial) that would fall during the Outbreak Period is also paused during the Outbreak Period. The normal appeal deadline is 180 days after notice of the claim denial, and now an appeal deadline that would otherwise occur during the Outbreak Period will be paused until after the Outbreak Period. So, for example, if the notice of claim denial was dated January 28, 2020, then the beneficiary would have exhausted 32 days of the COBRA election period by March 1, and would still have 148 days remaining to file the appeal after the end of the Outbreak Period. If the notice of claim denial was dated during the Outbreak Period, then the beneficiary would have the full 180 days after the end of the Outbreak Period to file the appeal. Deadlines for filing a request for external review, and providing information on that request, are likewise extended.
Special Enrollment Requests.
Individuals normally have 30 days (in some circumstances 60 days) to request special enrollment in a health plan outside of the regular open enrollment period. Birth of a child and marriage are events for which individuals can request special enrollment for 30 days after the event. Pursuant to these extensions, individuals now have an extended period that adds the remaining Outbreak Period to the time period in which they can request special enrollment.