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Many of us assumed that the National Emergency would not end on April 30th, 2020 as the agency guidance suggested in its examples, however, we all hoped it would be over by now. As the National Emergency continues, more employers find themselves having to deal with late COBRA elections and payments, enrollment requests well beyond the typical 30-day window, and a seemingly never-ending run-out period for HRAs and health FSAs.
As a quick reminder, last April the agencies issued a joint final rule extending time frames for COBRA elections and payments, HIPAA special enrollment notices, and ERISA claims submissions. The rule indicated that all applicable deadlines were suspended beginning March 1st, 2020 until 60 days after the end of the National Emergency (i.e. the “Outbreak Period”). President Trump has not declared the National Emergency over, and Congress hasn’t taken any such action either, so the Outbreak Period continues without any definite end in sight. Over a short period of time, the Outbreak Period certainly provided some additional protection and flexibility for employees while having only a minor impact on employers and plan administration. However, as the Outbreak Period drags on, the burden for employers has increased.
The biggest struggle and risk to employers is likely the extended COBRA election and payment deadlines.
Employees who experienced a qualifying event triggering a COBRA continuation right as of March 1st, 2020, or later have the option to elect COBRA up to 60 days after the end of the Outbreak Period since their 60-day election period will not begin to toll until the Outbreak Period ends. Such an individual would then also have an additional 45 days beyond electing COBRA to make full payment. It may be difficult for individuals to delay electing COBRA for many months and then have enough cash to make premium payments for all such months at once, but if that does occur, will the carrier or stop-loss vendor allow the coverage to be reinstated retroactively? Will the COBRA administrator handle this appropriately?
For those who elected COBRA prior to or during the Outbreak Period, payment deadlines are also extended. For example, any payments missed during the Outbreak Period would still be timely up to 30 days after the end of the Outbreak Period because the 30-day grace period will not begin to toll until the Outbreak Period ends. During the Outbreak Period, the employer and carrier have a few options for handling nonpayment:
Continue to pay the premium on behalf of the COBRA participant and then terminate retroactively if full payment is not made after the Outbreak Period;
Continue to pay the premium on behalf of the COBRA participant, but suspend claims payments until payment is made; or terminate coverage retroactively if full payment is not made after the Outbreak Period; or
Terminate coverage and then reinstate retroactively (including reprocessing any applicable claims) if full payment is made after the Outbreak Period.
The employer must carefully coordinate this decision with the carrier (or stop-loss vendor) to ensure the carrier will provide coverage, suspend claims, or terminate/reinstate retroactively. In addition, the employer should really make this decision uniformly for all COBRA participants and ensure the COBRA administrator will handle administration accordingly. Unless the COBRA participant confirms a desire to discontinue coverage (beyond just failing to pay), the employer must ensure there is a way to provide the coverage if the individual eventually makes payment.
HIPAA Special Enrollments
Many employers have struggled over the last couple of months with HIPAA special enrollment requests as well. Employees who request mid-year enrollment due to a loss of coverage, acquisition of a dependent due to marriage or birth/adoption, or becoming newly eligible for a Medicaid/CHIP subsidy are generally required to request enrollment within 30 or 60 days of the event depending upon which event occurred. This 30-day (or 60-day) notification period is suspended during the Outbreak Period, meaning an event could occur now and enrollment could be requested up until 30 (or 60) days following the end of the Outbreak Period. NOTE: The extension applies to the notice time frame, but does not change the requirements for the effective date. Upon receiving a request for enrollment, the plan is in compliance so long as coverage is made effective no later than 1st of the month following receipt of the notice unless the triggering event was a birth or adoption, in which case the plan must make coverage effective retroactively back to the date of birth or adoption.
For example, if an employee got married in September 2020, a HIPAA special enrollment right is triggered for the employee, spouse, and any newly acquired dependents (e.g. stepchildren). Typically notice of the event would be required within 30 days of the marriage for any such individuals to exercise their special enrollment right. However, if the employee requested enrollment for the spouse in December 2020, the plan would be in compliance so long as coverage for the spouse no later than January 1st, 2021.
HRA and Health FSA Claims
While the agencies’ joint rule doesn’t specifically address health FSA or HRA claims, it is generally accepted that because claims for reimbursement under a health FSA or HRA are considered “ERISA claims” they are therefore subject to the extended deadlines during the Outbreak Period. For a health FSA or HRA, rather than submission within a date tied to when each expense was incurred, claims are generally required to be submitted within a certain time frame following the end of the plan year (i.e. a run-out period). If a 2019 plan year’s run-out period extended beyond March 1st, 2020, it appears that the employer would have to allow claims incurred during the 2019 plan year to be submitted for reimbursement through the end of the Outbreak Period + any time that was remaining in the run-out period as of March 1st, 2020. As time passes, it becomes less likely that plan participants are still holding onto claims for reimbursement from a 2019 plan year that ended early in 2020. However, employers with plan years that ended in the second half of 2020 should keep this requirement in mind as their normal run-out periods end and the Outbreak Period continues.