Final Rule Benefit Plan Extensions

On Wednesday, April 29, the Employee Benefits Security Administration, Department of Labor, Internal Revenue Service, and Department of the Treasury (the “Agencies”) released a final rule (“final rule,” or “rule”) which altered and extended the timelines tied to certain benefit plans. The scope of the rule covers HIPAA, COBRA, and claim filing deadlines. A copy of the final rule can be found here. 

The rule defines March 1, 2020 as the first day of what the Agencies are calling the “National Emergency” period. The Agencies are then defining what they call the “Outbreak Period” as the period of time from the first day of the National Emergency until 60 days following the date that is announced as the last day of the National Emergency period (this date has not yet been announced). The rule extends several timeframes that will affect employers, participants, and administrators.

For the purposes of the examples included below as well as the detail and examples cited in the final rule, the Agencies use April 30, 2020 as the assumed end date of the National Emergency.  The Agencies confirm, however, that this date was used simply to make the examples clear and understandable.  The assumed April 30 end date results in the Outbreak Period running from March 1, 2020 through June 29, 2020 (the 60th day after the assumed end of the National Emergency).  If the National Emergency period extends beyond April 30 then the Outbreak Period will extend beyond June 29. Additionally, the rule acknowledges the uncertain duration of the COVID-19 pandemic and notes that additional guidance will be provided for specific parts of the country, if necessary.

The following provides an overview of many of the changes and some examples of how the extensions might be applied:

HIPAA Special Enrollment

HIPAA requires a special enrollment period in certain circumstances, including when an employee or dependent loses eligibility for any group health plan or other health insurance coverage in which the employee or the employee’s dependents were previously enrolled (including coverage under Medicaid and the Children’s Health Insurance Program), and when a person becomes a dependent of an eligible employee by birth, marriage, adoption, or placement for adoption. With the final rule, the 30-day and 60-day HIPAA special enrollment timeframes are extended by disregarding the Outbreak Period.

COBRA

The COBRA process includes a number of deadlines, ranging from notification to the COBRA administrator of a Qualifying Event, notification to a Qualified Beneficiary of their COBRA rights and options, and timeframe for making initial and ongoing COBRA premium payments. Of note, the following timeframes related to COBRA have been altered by the final rule:

• The 60-day timeframe to elect COBRA and the 45-day timeframe to make an initial COBRA payment
• The 30-day Grace Period to make subsequent, monthly COBRA premium payments

Examples (assuming that the National Emergency was declared over on April 30th then the Outbreak Period ends on June 29^th): 

• COBRA election period. A COBRA qualifying event occurs on March 1, 2020.  Since the Outbreak Period is disregarded with respect to this timeline, the 60-day window to elect coverage begins on June 29. In this example, the COBRA Qualified Beneficiary would have 60 days from that point to elect coverage with a retroactive effective date of March 1, 2020.
• COBRA premium payments.  The Outbreak Period is ignored with respect to monthly COBRA premium payments. Therefore, the payment window would re-open on June 29, 2020 and participants would have 30 days to make payments for previous months.  If the participant did not make March, April, May, or June payments during the Outbreak Period, the participant would have until July 29, 2020 to make premium payments for each of those missed months.  If on July 29, 2020 the participant made payments for March and April, then the individual’s coverage would be retroactively terminated effective as of May 1, 2020 (as March and April 2020 premiums would be considered paid-in-full).

Claims Filing and Appeals Deadline

Employee benefit plans have established timeframes within which participants can file claims previously incurred.  The rules extend the plan’s deadline to file a benefit claim and to file an appeal under the plan’s claims procedures by disregarding the Outbreak Period.  It is unclear at this time as to whether the extension impacts the run-out period for Flexible Spending Account (FSA) plans.  Sentinel Benefits will continue to monitor regulatory guidance to determine if the extension will apply to FSA run-out periods, as it does extend the filing timeline for other health plans. 

Sentinel Benefits & Financial Group Action Steps

The Sentinel Team is working on the following items as next steps:

1. We are working to get answers to our many questions about the application of this rule.  This includes monitoring additional guidance as well as working with advocacy groups and other partners to get more specific answers.
2. As aspects of the rule are clarified, we will compile helpful resources and provide more information as it is available.
3. For employers to whom we provide COBRA administration services, we will be adding new language to our communications to make qualified beneficiaries aware of these changes.  Beyond that, we will abide by the rule by extending the election and payment timeframes for pending and/or active COBRA participants.

If you have specific questions regarding the rule, please reach out to your Sentinel Benefits Health & Welfare or COBRA Account Manager.