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COVID-19 Employee Benefits Temporary Relief

May 6, 2020

On April 28, 2020, the Department of Labor (DOL), Internal Revenue Service (IRS) and Treasury Department issued a Rule extending certain time frames affecting a participant’s rights.  The agencies believe that immediate relief is needed to preserve and protect the benefits of participants and beneficiaries in employee benefit plans during the National Emergency.  Additional time for participants to comply with certain deadlines affecting COBRA continuation coverage, special enrollment periods, claims for benefits, appeals of denied claims, and external review of certain claims will be provided with this relief.

Outbreak Period

Mandatory notice requirements that ordinarily must be taken have been eased by the relief notice during the Outbreak Period.  The Outbreak Period is the timeframe between the date the National Emergency was declared, March 1st, 2020 until 60 days after announced end of the National Emergency.

It is important to note that for group health plans the Outbreak Period is disregarded when determining the date for providing a COBRA election notice.  Also, no plan will be treated as failing to be operated in accordance with the terms of the plan solely as a result of complying with the postponement of a deadline as set forth in the joint notice.

Relief applies to the following:

  • The 30-day period (or 60-day period if applicable) to request HIPAA special enrollment;
  • The 60-day election period for COBRA continuation coverage under ERISA;
  • The date for making COBRA premium payments;
  • The date for individuals to notify the plan of a qualifying event or determination of disability under ERISA;
  • The date individuals may file a benefit claim under the plan’s claims procedure;
  • The date claimants may file an appeal of an adverse benefit determination under the plan’s claims;
  • The date claimants may file a request for an external review after receipt of an adverse benefit determination or final internal adverse benefit determination; and
  • The date a claimant may file information to perfect a request for external review upon a finding that the request was not complete.

The following relief example circumstances are using the hypothetical date of April 30th.

Example 1 (Electing COBRA): Individual A works for Employer X and participates in X’s group health plan. Due to the National Emergency, Individual A experiences a qualifying event for COBRA purposes as a result of a reduction of hours below the hours necessary to meet the group health plan’s eligibility requirements and has no other coverage. Individual A is provided a COBRA election notice on April 1, 2020. What is the deadline for A to elect COBRA?

Answer: Individual A is eligible to elect COBRA coverage under Employer X’s plan. The Outbreak Period is disregarded for purposes of determining Individual A’s COBRA election period. The last day of Individual A’s COBRA election period is 60 days after June 29, 2020, which is August 28, 2020. Here, the National Emergency ended on April 30th with temporary relief expiring 60 days thereafter, namely June 29th. As a result of the relief expiring, the COBRA election notice timeframe of 60 days is now triggered. Therefore, Individual A has 60 days from June 29th for which to elect continued coverage. Consequently, Individual A’s COBRA election period will have run from April 1st through August 28th.

Example 2 (Special enrollment period): Individual B is eligible for, but previously declined participation in, her employer-sponsored group health plan. On March 31, 2020, Individual B gave birth and would like to enroll herself and the child into her employer’s plan; however, open enrollment does not begin until November 15th.  When may Individual B exercise her special enrollment rights?

Answer: The Outbreak Period is disregarded for purposes of determining Individual B’s special enrollment period. Individual B and her child qualify for special enrollment into her employer’s plan as early as the date of the child’s birth. Individual B may exercise her special enrollment rights for herself and her child into her employer’s plan until 30 days after June 29, 2020, which is July 29, 2020, provided that she pays the premiums for any period of coverage.

Example 3 (COBRA premium payments): On March 1, 2020, Individual C was receiving COBRA continuation coverage under a group health plan. More than 45 days had passed since Individual C had elected COBRA. Monthly premium payments are due by the first of the month. The plan does not permit qualified beneficiaries longer than the statutory 30-day grace period for making premium payments. Individual C made a timely February payment, but did not make the March payment or any subsequent payments during the Outbreak Period. As of July 1st, Individual C has made no premium payments for March, April, May, or June. Does Individual C lose COBRA coverage, and if so for which month(s)?

Answer: The Outbreak Period is disregarded for purposes of determining whether monthly COBRA premium installment payments are timely. Premium payments made by 30 days after June 29, 2020, which is July 29, 2020, for March, April, May, and June 2020, are timely, and Individual C is entitled to COBRA continuation coverage for these months if she timely makes payment. Under the terms of the COBRA statute, premium payments are timely if made within 30 days from the date they are first due. In calculating the 30-day period, however, the Outbreak Period is disregarded, and payments for March, April, May, and June are all deemed to be timely if they are made within 30 days after the end of the Outbreak Period. Accordingly, premium payments for four months (i.e., March, April, May, and June) are all due by July 29, 2020. Individual C is eligible to receive coverage under the terms of the plan during this interim period even though some or all of Individual C’s premium payments may not be received until July 29, 2020. Since the due dates for Individual C’s premiums would be postponed and Individual C’s payment for premiums would be retroactive during the initial COBRA election period, Individual C’s insurer or plan may not deny coverage, and may make retroactive payments for benefits and services received by the participant during this time.

Example 4 (COBRA premium payments): Same facts as Example 3. By July 29, 2020, Individual C made a payment equal to two months’ premiums. For how long does Individual C have COBRA continuation coverage?

Answer: Individual C is entitled to COBRA continuation coverage for March and April of 2020, the two months for which timely premium payments were made, and Individual C is not entitled to COBRA continuation coverage for any month after April 2020. Benefits and services provided by the group health plan (e.g., doctors’ visits or filled prescriptions) that occurred on or before April 30, 2020 would be covered under the terms of the plan. The plan would not be obligated to cover benefits or services that occurred after April 2020.

While these examples are useful, additional guidance is needed as there are many unanswered questions as to processes and procedures.

 

For more information regarding an Employee Benefits program, for your business or organization, contact Jason Della Penna, Executive Vice President at Brown & Brown Benefit Advisors, jdellapenna@advisorsbb.com.

“This content is strictly informational and should not be used as specific advice on insurance products, legal, accounting and/or tax related matters. Insureds should always contact the appropriate licensed professional for their insurance, legal, accounting or tax needs.”

Please be advised that any and all information, comments, analysis, and/or recommendations set forth above relative to the possible impact of COVID-19 on potential insurance coverage or other policy implications are intended solely for informational purposes and should not be relied upon as legal advice. As an insurance broker, we have no authority to make coverage decisions as that ability rests solely with the issuing carrier. Therefore, all claims should be submitted to the carrier for evaluation. The positions expressed herein are opinions only and are not to be construed as any form of guarantee or warranty. Finally, given the extremely dynamic and rapidly evolving COVID-19 situation, comments above do not take into account any applicable pending or future legislation introduced with the intent to override, alter or amend current policy language.


Brown & Brown Benefit Advisors