The Department of Labor’s (DOL’s) Employee Benefits Security Administration (EBSA) issued deadline relief and other guidance under Title I of ERISA (the Employee Retirement Income Security Act of 1974) to help employee benefit plans, plan participants and beneficiaries, employers and other plan sponsors, plan fiduciaries, and other service providers impacted by the coronavirus (COVID-19) outbreak.
“EBSA will continue to safeguard the employee benefits of American workers while ensuring that employers and plans have the flexibility they need to continue delivering benefits during this challenging time,” said Assistant Secretary of Labor for EBSA, Preston Rutledge.
The DOL notice was issued jointly with the Departments of Treasury and Internal Revenue Service, and it extends certain time frames affecting participants’ rights to healthcare coverage, portability, and continuation of group health plan coverage under COBRA, and extends the time for plan participants to file or perfect benefit claims or appeals of denied claims. These extensions provide participants and beneficiaries of employee benefit plans additional time to make important health coverage and other decisions affecting their benefits during the coronavirus outbreak. The joint notice can be accessed here.
Commentary: Basically, this guidance provides the actions that must be taken during the time period of March 1, 2020, until 60 days after the time the federal government declares the COVID-19 emergency to have ended. The 60th day being considered the end of the “Outbreak Period” as the notices refer to it. While we are sharing this with you as soon as possible, we expect that more concrete action plans will be shared in the next few days and weeks. The impact here affects both fully-insured and self-funded health plans, and while the guidance can be relied upon now, fully-insured plans can expect to see significant input, feedback and guidance from their respective carriers shortly.
Standard timing provides 60 days from a Qualifying Event (loss of coverage) to make a COBRA election, and 45 days from that first election to make your first COBRA premium payment. All other months require COBRA payments on the first of the month, or post-marked by the last day of the month in order to be “timely”. Those timelines still apply, but they “clock” on them doesn’t begin to run until the specified days after the National Emergency ends. This means the time period from March 1, 2020 until 60 days after the announced end of the national emergency (“Outbreak Period”) must be disregarded.
COBRA Election – Example 1
Let’s assume the National Emergency ends on April 30, 2020. That means the “Outbreak Period” ends on June 29, 2020 (the 60th day after the end of the National Emergency). Additional guidance is expected to address different “Outbreak Period” end dates for different parts of the country.
- Individual A works for Employer X and participates in X’s group health plan. Due to the National Emergency, Individual A experiences a Qualifying Event for COBRA purposes as a result of a reduction of hours below the hours necessary to meet the group health plan’s eligibility requirements, has no other coverage, and is therefore eligible to elect COBRA under Employer X’s plan.
- In Example 1, Individual A is eligible to elect COBRA coverage under Employer X’s plan. The Outbreak Period is disregarded for purposes of determining Individual A’s COBRA election period. The last day of Individual A’s COBRA election period is 60 days after June 29, 2020, which is August 28, 2020.
New Baby Example – Example 2 (Special enrollment period)
Individual B is eligible for, but previously declined participation in, her employer-sponsored group health plan. On March 31, 2020, Individual B gave birth and would like to enroll herself and the child into her employer’s plan; however, open enrollment does not begin until November 15. When may Individual B exercise her special enrollment rights?
- Under traditional rules, “B” would have 30 days from March 31, 2020 to add her new baby to her employer’s plan.
- In Example 2, the Outbreak Period is disregarded for purposes of determining Individual B’s special enrollment period. Individual B and her child qualify for special enrollment into her employer’s plan as early as the date of the child’s birth. Individual B may exercise her special enrollment rights for herself and her child into her employer’s plan until 30 days after June 29, 2020, which is July 29, 2020, provided that she pays the premiums for any period of coverage.
COBRA Premium Payments – Example 3
On March 1, 2020, Individual C was receiving COBRA continuation coverage under a group health plan. More than 45 days had passed since Individual C had elected COBRA. Monthly premium payments are due by the first of the month. The plan does not permit qualified beneficiaries longer than the statutory 30-day grace period for making premium payments. Individual C made a timely February payment, but did not make the March payment or any subsequent payments during the Outbreak Period. As of July 1, Individual C has made no premium payments for March, April, May, or June. Does Individual C lose COBRA coverage, and if so for which month(s)?
- In Example 3, the Outbreak Period is disregarded for purposes of determining whether monthly COBRA premium installment payments are timely. Premium payments made by 30 days after June 29, 2020, which is July 29, 2020, for March, April, May, and June 2020, are timely, and Individual C is entitled to COBRA continuation coverage for these months if they make timely payments. Under the terms of the COBRA statute, premium payments are timely if made within 30 days from the date they are first due.
- In calculating the 30-day period, however, the Outbreak Period is disregarded, and payments for March, April, May, and June are all deemed to be timely if they are made within 30 days after the end of the Outbreak Period. Accordingly, premium payments for four months (i.e., March, April, May, and June) are all due by July 29, 2020.
- Individual C is eligible to receive coverage under the terms of the plan during this interim period even though some or all of Individual C’s premium payments may not be received until July 29, 2020. Since the due dates for Individual C’s premiums would be postponed and Individual C’s payment for premiums would be retroactive during the initial COBRA election period, Individual C’s insurer or plan may not deny coverage, and may make retroactive payments for benefits and services received by the participant during this time.
The additional examples are no less noteworthy and each should be read and discussed with your employee benefits and/or pension plan professionals. They include:
- Ex 4 – COBRA premium payment
- Ex 5 – claims for medical treatment under a group health plan
- Ex 6 – internal appeal – disability plan
- Ex 7 – internal appeal – employee pension plan
EBSA Disaster Relief Notice 2020-01 extends the time for plan officials to furnish benefit statements, annual funding notices, and other notices and disclosures required by ERISA so long as they make a good-faith effort to furnish the documents as soon as administratively practicable. The notice explains that good faith includes the use of electronic alternative means of communicating with plan participants and beneficiaries who the plan fiduciary reasonably believes have effective access to electronic means of communication, including email, text messages, and continuous access to websites. The notice also includes compliance assistance guidance on plan loans, participant contributions and loan payments, blackout notices, Form 5500 and Form M-1 filing relief, and other general compliance guidance on ERISA fiduciary responsibilities. The Disaster Relief Notice is posted on EBSA’s website.
The department also issued a set of Frequently Asked Questions (FAQs) on health benefit and retirement benefit issues to help employee benefit plan participants and beneficiaries, plan sponsors, and employers impacted by the coronavirus outbreak understand their rights and responsibilities under ERISA.
Please contact your AssuredPartners Account Manager or Sales Executive for additional information or to discuss how these changes impact your plans.
- AP Information Graphic – Timeline (PDF)
- Final Rule (PDF, 5 pages)
- Final Rule (Federal Register)
- FAQs (PDF, 11 pages)
- Disaster Relief (html)
Updated Model COBRA Notices from the USDOL
- COBRA Model Notice FAQs
- COBRA Model General Notice
- COBRA Model General Notice (Spanish)
- COBRA Model Election Notice
- COBRA Model Election Notice (Spanish)
- DOL News Release