On Monday (May 4, 2020), the DOL and IRS jointly issued a new final rule on the “Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak.” In essence, the rule requires that, when calculating certain deadlines or time periods, group health, disability, pension and other ERISA covered benefit plans must disregard the time period from March 1, 2020 until 60 days after the end of the declared COVID-19 National Emergency or another date as the IRS/DOL might later announce (which is defined as the “Outbreak Period”).
The intent of the new rule is to address the stated concern that “[a]s a result of the National Emergency, participants and beneficiaries covered by group health plans, disability or other employee welfare benefit plans, and employee pension benefit plans may encounter problems in exercising their health coverage portability and continuation coverage rights, or in filing or perfecting their benefit claims.” The Department of Labor has also issued related FAQs for participants and beneficiaries.
Most notably, the new rule impacts the following:
Special Enrollment in Group Health Insurance – Under HIPAA group health plans must permit an otherwise eligible individual to enroll in the group health plan outside the normal enrollment window if the individual or his/her dependent loses his/her other health coverage (for example if a spouse is terminated) or if someone becomes a new dependent through birth, marriage or adoption. Typically, such individuals have 30 days after they lose their other coverage to request special enrollment in the group health plan. Under the new rule, the time for an individual who loses group health coverage to request a special enrollment will not start running until after the end of the Outbreak Period (i.e. until sixty (60) days after the end of the declared emergency or after the date set by DOL/IRS). For example, if an employee had a new baby on April 17, 2020 the employee would typically have had until May 17, 2020 to enroll the new child in the group health plan. Under the new rule, the 30 days won’t start until after the end of the Outbreak Period. So if the National Emergency were to end on June 1, 2020 the enrollment window wouldn’t start until July 31, 2020 (60 days later) and the employee would therefore have until August 30, 2020 to enroll the new child.
COBRA Elections – Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), covered individuals who experience a qualifying event that causes them to lose eligibility for their group health insurance (for example a termination or divorce) typically have 60 days to elect to continue coverage under the plan for a set period of time. Under the new rule, the 60 days to make a COBRA election will not begin to run until after the end of the Outbreak Period. As with a standard COBRA election, a timely COBRA election under the new rules (i.e. one made 60 days after the end of the Outbreak) will provide coverage that is retroactive to the qualifying event. In addition, the deadlines for individuals to make their COBRA premium payments will also be tolled until the end of the Outbreak Period. While the COBRA election and premium deadlines are tolled, the new rule does not change the timeframe in which plans must notify individuals of their COBRA rights after a qualifying event.
The new rule also tolls the deadlines and timelines associated with ERISA claims procedures and external reviews until after the end of the Outbreak Period.
While this rule may prove a welcome relief for certain individuals who might have otherwise missed their deadlines during the COVID-19 crisis – it will certainly generate additional work for the plan administrators and raise some serious logistical questions with respect to retroactive benefit claims and coverage for individuals whose premium obligations have been tolled.
Thank you to the Small Business Legislative Council, Paula Calimafde, and Jessica Summers for this update.