Recall that as part of the IRS/DOL response to COVID-19, multiple COBRA and health plan deadlines were extended until after the Outbreak Period (60 days after the end of the National Emergency) or until February 28, 2021 (whichever is earlier). When this legislation was passed, few expected the pandemic to still be impacting daily life into 2021. As the sunset date approached, the joint agencies were silent on whether the extended deadlines would actually expire given the continuing impact of COVID-19 and the fact that the Outbreak Period is still open. This left employers and plan participants alike wondering about how to administer the deadline extensions.
Finally, on February 26, 2021, The Employee Benefit Security Administration (EBSA) issued clarifying guidance. The guidance essentially redefined the deadline extension to the earlier of the following:
- 60 days after the end of the Outbreak Period
- One year after the initial deadline for any given individual.
Fundamentally, the regulators stretched the interpretation of the law to the maximum extent possible with the intent of offering maximum flexibility and protection for plan participants. In doing so, they also created a veritable nightmare for plan administrators. Now, each individual has a personalized deadline extension (up to a maximum of one year) from the date of their initial election deadline.
Example #1: A qualified beneficiary would have been required to make a COBRA election by March 1, 2020. The new guidance delays that requirement until February 28, 2021. This is the earlier of one year from March 1, 2020 or the end of the Outbreak Period (which remains ongoing).
Example #2: A qualified beneficiary would have been required to make a COBRA election by March 1, 2021. The new guidance delays that election requirement until the earlier of one year from that date (i.e., March 1, 2022) or the end of the Outbreak Period.
Example #3: A plan would have been required to furnish a notice or disclosure by March 1, 2020. The new guidance delays the notice/disclosure deadline to February 28, 2021.
In all circumstances, the delay for actions required or permitted does not exceed one year.
Reasonable, Prudent, and in the Interest of Employees
The DOL recognizes that affected plan participants may continue to encounter an array of problems due to the ongoing nature of the COVID-19. In fact, in an unprecedented statement, they went so far as to articulate the following:
Plan administrators should act reasonably, prudently, and in the interest of employees to ensure their families maintain their health, retirement, and other employee benefit plans for their physical and economic well-being.
Here, the DOL has provided loose-but-real guidance that employers should make reasonable accommodations to prevent the loss of or undue delay in payment of benefits. In such cases, employers should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames.
While always maintaining the commitment to plan compliance, the team at Vita has and will continue to support employers and plan participants in this spirit.
Mind Your Insurance Contracts
A very real quagmire is presented here for employers. To the extent that an employer takes actions “in the interest of preventing loss of benefits for employees” (and qualified beneficiaries) but outside the legislatively defined deadlines, they run the risk of extending coverage outside of the insurance contract they have secured with their carrier. Extreme care should be taken in such actions as insurance carriers are not under any obligation to extend such grace, especially when it might result in adverse selection.
Reminder of Impacted Deadlines
Following are the deadlines that remain impacted by this legislation and for which the new deadline extension framework applies.
- The 60-day deadline for individuals to notify the plan of a qualifying event
- The 60-day deadline for individuals to notify the plan of a SS determination of disability
- The 30-day deadline for employers to notify plan administrators of a COBRA event
- The 14-day deadline for plan administrators to furnish COBRA election notices (44 days when combined with 30 days above)
- The 60-day deadline for participants to elect COBRA
- The 45-day deadline in which to make a first premium payment
- The 30-day deadline for subsequent premium payments.
HIPAA Special Enrollment
- The 30-day special enrollment period triggered when eligible employees or dependents lose eligibility for other health plan coverage (in which they were previously enrolled)
- The 30-day special enrollment period triggered when an eligible employee acquires a dependent through birth, marriage, adoption, or placement for adoption
- The 60-day special enrollment period triggered by changes in eligibility for state premium assistance under the Children’s Health Insurance Program or loss of Medicaid/CHIP eligibility.
Group Health Plans (Including FSAs)
- The deadline for individuals to file claims for benefits, for initial disposition of claims, and for providing claimants a reasonable opportunity to appeal adverse benefit determinations
- The 180-day timeframe to appeal