From Life Events to COBRA, the New COVID-19-related Outbreak Period Relief is a Game Changer

05.04.20

On April 29, 2020, the Departments of Labor and Treasury issued a notice that extends certain time frames affecting participants’ rights and plan obligations as they relate to various plan requirements.  The extensions of time periods cannot be pegged with certainty at the moment as they are tied to the yet-to-be-announced end of the COVID-19 National Emergency declared by President Trump on March 13, 2020.  However, what is known is the extensions themselves inherently stand to significantly alter various aspects of plan administration through to the end of what is now known as the “Outbreak Period.”  

According to the notice, the Outbreak Period runs from March 1, 2020 until 60 days after the announced end of the National Emergency or such other date announced by the Agencies in a future notice.  By way of intent, this period recognizes “the numerous challenges participants and beneficiaries already face as a result of the National Emergency” and, by way of combined agency action, takes “steps to minimize the possibility of individuals losing benefits because of a failure to comply with certain pre-established timeframes.”  The Agencies also recognize that affected group health plans may have difficulty in complying with certain notice obligations.

Relief for Plan Participants, Beneficiaries, Qualified Beneficiaries, and Claimants

All group health plans, disability and other employee welfare benefit plans, and employee pension benefit plans subject to ERISA or the Code must disregard the period from March 1, 2020 until sixty (60) days after the announced end of the National Emergency or such other date announced by the Agencies in a future notice (the “Outbreak Period”) for all plan participants, beneficiaries, qualified beneficiaries, or claimants wherever located in determining the following periods and dates:

  1. The 30-day period (or 60-day period, if applicable) to request special enrollment,
  2. The 60-day election period for COBRA continuation coverage,
  3. The date for making COBRA premium payments, and
  4. The date for individuals to notify the plan of a qualifying event or determination of disability.

ALSO:

  • The date within which individuals may file a benefit claim under the plan’s claims procedure,
  • The date within which claimants may file an appeal of an adverse benefit determination under the plan’s claims procedure,
  • The date within which 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 within which a claimant may file information to perfect a request for external review upon a finding that the request was not complete.

Relief for Group Health Plans

With respect to group health plans, and their sponsors and administrators, the Outbreak Period shall be disregarded when determining the date for providing a COBRA election notice under ERISA section 606(c) and Code section 4980B(f)(6)(D).

Relief by Comparison

Other Noteworthy Considerations

  • While this relief extends many deadlines, it does nothing to minimize or reduce employee and Qualified Beneficiary cost obligations.  Employees will still be responsible for their share of group health plan costs dating back to the effective date of coverage.  Qualified Beneficiaries will still be responsible for paying monthly COBRA premiums dating back to start of coverage continuation under COBRA. 
  • Relief also is available when it comes to furnishing ERISA-regulated notices (Summary Plan Descriptions, Summary of Benefits and Coverage, Summary Annual Report, Summary of Material Modification, various COBRA notices among others).  Violations during the Outbreak Period will be ignored so long as the plan and its fiduciaries act in good faith and furnish the material “as soon as administratively practicable under the circumstances.”
  • Form 5500 filings otherwise due on or after April 1 and before July 15, 2020 are now due July 15, 2020.

Practical Implications

The practical implications of these actions taken by federal authorities are diverse.  Among the ways administrative practices are being modified to adapt to this relief effort include the following:

Benefits Enrollment and Change Processing – Online, event-based benefit change functionality can be modified to ignore the traditional timeframes within which these events must take place in order to request a related benefits enrollment changes. Employees should still be required to submit documentation to support event-based changes. Changes that honor the Outbreak Period will increase the likelihood of retroactive deductions needing to be processed via the established payroll protocols. Support staff will need training in order to adequately educate employees on these changes.

Benefits Communications – Employers must decide if they will modify or supplement existing communications (or both).  Supplementation via inserts will make the process of reverting back to the traditional requirements easier once the Outbreak Period becomes obsolete.  Employers should obtain vendor positions with respect to any need to leverage extended notification timeframes due, for example, to closed facilities and scaled back operations resulting from the pandemic. 

COBRA Notifications – Employers also need to determine the best approach for generating and issuing various COBRA notifications. Most will likely be required to support this relief effort through a combination of suspended practices, substantive notice content changes and supplemental member-level communications.

COBRA Payment Reconciliation Disjoints – This relief effort limits the employer’s ability to influence coverage changes due to payment-related factors within traditional timeframes.  Therefore, employers can expect a greater number of situations where collected, reconciled premiums do not align with actual coverage maintained by members. 

Insurer Billing/Invoice Reconciliation Disjoints – Similar to the COBRA coverage to payment disjoints described previously, this relief stands to increase the potential for retroactive coverage changes with dates that sit outside the traditionally accepted 30 and 60-day policy thresholds.  

Forfeited FSA Balances – Previously communicated 2019 Health Care FSA balance information is now subject to change. Forfeited balances will not be realized until the conclusion of the Outbreak Period.

Conclusion

Your Baker Tilly Vantagen support teams are ready to help you understand how we are positioning to support these latest federal COVID-19-related response measures.  Please contact us if you have any questions regarding this subjects covered in this release.

As with previous other regulatory change scenarios, employers will want to work with their third-party vendors and insurers to understand their positioning and readiness with respect to this Outbreak Period. Understanding these evolving dynamics will enable employers to gain control over employee education and the potential impact these changes will have upon program costs.


The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.