Oh What a Relief It Is - For Health Plan Participants

Seyfarth Synopsis: On Tuesday, shortly after the IRS extended deadline relief to employee benefit plans, the U.S. Department of Labor granted its own relief for a number of deadlines related to the administration of employee benefit plans as a result of the COVID-19 national emergency.  The relief is contained in two separate notices, one issued just by the DOL and one issued jointly with the IRS.  The relief that is primarily applicable to health plans is summarized in this posting.  We will describe the relief applicable to 401(k) and other retirement plans in a separate legal update.

The joint DOL/IRS notice provides relief for plan participants and beneficiaries by extending certain timeframes governing participants’ healthcare coverage portability and continuation of group health plan coverage.  Specifically, the notice addresses the following timeframes, and provides that the period from March 1, 2020 to 60 days after the announced end of the national emergency (referred to in the notice as the “Outbreak Period”) must be disregarded for purposes of determining whether the participant timely took the action that is required:

• HIPAA Special Enrollment: HIPAA requires a group health plan to provide a special enrollment period to certain employees and their dependents in specified circumstances, such as a loss of certain other coverage or the addition of a new dependent because of birth, marriage, adoption or placement for adoption.  Specifically, to enroll in a group health plan, the employee must request enrollment within 30 (and sometimes 60) days after the occurrence of the event triggering the event.   Under the joint notice, this period must be tolled during the Outbreak Period.
• COBRA Election: Under the COBRA continuation coverage rules, a qualified beneficiary generally has a period of at least 60 days to elect COBRA continuation coverage under a group health plan.  Absent this new guidance which tolls the period, a group health plan may disregard a COBRA election made outside of this election window.
• COBRA Premium Payment: COBRA provides that  a group health plan may not require payment of the initial premium earlier than 45 days after the initial COBRA election.  After initial payment, payments must be made no later than 30 days after the first day of the period for which payment is being made.  Typically, COBRA continuation coverage may be terminated for failure to pay premiums timely based on the periods described, but the joint notice requires a plan to disregard the Outbreak Period in setting deadlines for payment of COBRA premiums.
• Claims Deadline Extended: The joint IRS/DOL notice also makes a couple of important changes to group health plans' claims and appeals procedures, specifically extending for the duration of the Outbreak Period the time that a participant has to (i) file a benefit claim or appeal, (ii) file a request for an external review after receipt of an adverse benefit determination or final internal adverse benefit determination, and (iii) perfect a request for external review upon a finding that the request was not complete. Notably the joint notice does not extend the deadline for the plan administrator to decide claims or appeals

The joint notice was issued to help “minimize the possibility of individuals losing benefits because of a failure to comply with certain preestablished timeframes”, but it  also provides some relief to group health plans by providing that the Outbreak Period is disregarded when determining the due date for providing a COBRA election notice.

The guidance issued individually by the DOL, EBSA Disaster Relief Notice 2020-01, provides an extension of deadlines for furnishing other required notices or disclosures to plan participants, beneficiaries, and other persons during the Outbreak Period.  The relief only applies if the plan and responsible fiduciary acts in good faith and furnishes the notice, disclosure or document as soon as administratively practicable.  “Good faith” includes the use of electronic means of delivery to participants and beneficiaries if the fiduciary reasonably believes they “have effective access to electronic means of communication, including email, text messages, and continuous access websites”.  The relief applies to all ERISA Title I disclosures such as summary plan descriptions (SPDs), summaries of material modification (SMMs), notices relating to qualified medical child support orders, notices of COBRA rights, HIPAA certificates of creditable coverage, and documents that must be provided to participants and beneficiaries after written request.