On April 29, 2020, the U.S. Departments of Labor (Employee Benefits Security Administration, “EBSA”) and Treasury (IRS) published a final regulation, and EBSA issued a package of guidance and relief, for employee benefit plans affected by the COVID-19 outbreak. New rules regulating COBRA and the offer of coverage to those laid off or who experienced a loss of coverage are impacted. Please read below:
Final Regulation Extending Certain Deadlines
Under the final regulation, all group health plans, disability, and other employee welfare plans, and all pension plans that are subject to ERISA or the Internal Revenue Code, must disregard the “Outbreak Period” for purposes of determining certain deadlines. The “Outbreak Period” runs from March 1, 2020 until 60 days after the COVID-19 National Emergency ends (or such other date as the agencies announce). If there are different Outbreak Period end dates for different parts of the country, the agencies will issue additional guidance for relevant areas.
The Outbreak Period must be disregarded for purposes of:
The special enrollment period for enrolling in a health plan after a loss of coverage or acquiring a new dependent due to birth, marriage, adoption, or placement of adoption. Without the extension, the special enrollment period would be 30 days (or 60 days in the case of special enrollment rights under CHIP);
The period to elect COBRA coverage. Without the extension, the election period would be 60 days from the time the election notice is provided;
The deadline to pay COBRA premiums;
The period to file a claim or appeal for benefits (but not the period for deciding the claim);
The period to request external review under a health plan; and
The deadline for a plan to provide COBRA election notices.
For example, suppose an employee terminated employment and lost health coverage on February 29, 2020. The employer would have had 14 days to provide a COBRA election notice (deadline March 14, 2020), and the employee then would have had 60 days to make an election (deadline May 13, 2020) and another 45 days to make the first premium payment (deadline June 27, 2020). With the extension, the period from March 1, 2020, until 60 days after the National Emergency ends is disregarded. Assuming that the COBRA notice would have already been provided, this means that the employee would have until 120 days after the National Emergency ends to elect COBRA—retroactive to March 1, 2020—and another 45 days after that to make the first premium payment.
These new rules greatly impact self-funded health plans and further guidance is needed from federal agencies to determine accurate compliance. Simpara will continue to monitor these new rules and subsequent clarifications to provide up to date guidance. Rest assured that if you are leveraging our managed COBRA compliance services that your plan will automatically fall into compliance. For those self-administering COBRA, we recommend reaching out to discuss solutions and options available to you.
