By Joshua M. Osborne and Alexandra A. Ifrah
Employers who sponsor group health, dental and/or vision plans should be aware that the Department of Labor (DOL) just issued EBSA Disaster Relief Notice 2021-01 which provides specific guidance and recommendations to employers in connection with Outbreak Period relief previously issued by the DOL and Internal Revenue Service (IRS) in joint guidance issued last year in EBSA Disaster Relief Notice 2020-01 (Joint Notice).
The Joint Notice issued in 2020, in connection with the Coronavirus pandemic, provided relief to participants and beneficiaries by requiring the time period beginning on March 1, 2020 and ending 60 days after the end of the National Emergency (Outbreak Period) to be disregarded when determining a participant’s or beneficiary’s compliance with various notice and election deadlines including HIPAA Special Enrollment, COBRA elections and claims and appeals deadlines.
Although the 2020 Joint Notice provides that the Outbreak Period relief will extend until 60 days following the end of the COVID-19 National Emergency, the updated guidance clarifies that the agencies’ authority is limited by statute. Specifically, under ERISA and the Internal Revenue Code, the DOL and IRS are authorized to extend relief to individuals affected by a Presidentially declared disaster by allowing a period of up to one year to be disregarded when determining the date by which any actions is required or permitted to be completed. Because the COVID-19 National Emergency relates to a Presidentially declared disaster in connection with the COVID-19 Pandemic, the Outbreak Period relief is subject to the statutory one-year period of relief which becomes important with the upcoming anniversary of the beginning of the Outbreak Period on March 1, 2020.
Recognizing the confusion caused by the one-year statutory limit on the relief, the DOL clarifies in the newly issued guidance how the limitation applies to the relief. Moving forward, the deadline for plans or individuals to submit notices or elections subject to the Outbreak Period relief will disregard the time period that ends on the earlier of (a) one year from the date the plan or individual was eligible for relief or (b) 60 days after the end of the COVID-19 National Emergency. Further, the updated guidance confirms that the Outbreak Period relief will have to be applied on an individual-by-individual basis because each individual has up to a one-year relief that begins on the date the deadline would have originally begun (assuming the National Emergency has not ended).
For example, if a participant’s COBRA election period would have begun on March 1, 2020, the Outbreak Period relief will apply to disregard the one-year period from the date the individual was eligible for relief (March 1, 2020 – February 28, 2021) meaning that the 60-day deadline to elect COBRA would begin on March 1, 2021. Similarly, if a participant loses coverage in 2021 and receives the COBRA Election Notice on February 28, 2021, the COBRA election period, which would ordinarily begin on March 1, 2021, will begin on March 1, 2022 unless the COVID-19 National Emergency ends before that date. As it relates to HIPAA Special Enrollment Rights, assume employee of Company A was covered under the group health plan of their spouse’s employer, Company Z, but lost coverage in the Company Z group health plan on March 1, 2020 as a result of a divorce. If the Company A health plan has a 30-day enrollment period for HIPAA Special Enrollment Rights, the employee, who would ordinarily be required to enroll for coverage by March 31, 2020 based on a special enrollment right but will have until March 31, 2021 to elect coverage because of the 1-year period of relief under the Outbreak Period guidance.
The takeaway from the updated guidance is that plans and employers need to be aware that the Outbreak Period relief applies on an individual by individual basis which means that application of the Outbreak Period relief will vary depending on when the individual became eligible for relief.
Although the guidance does not create a new notice requirement, the Department of Labor recommends that individuals be notified of the end of the relief period and notes that prior plan disclosures may need to be updated to accurately describe the impact of the Outbreak Period relief. As a result, plans and employers should consider taking the following steps in response to the updated guidance:
- Update the HIPAA Special Enrollment Notice, the Initial COBRA Notice and the COBRA Election Notice to include an explanation of the Outbreak Period Relief;
- Identify any COBRA qualified beneficiaries who became eligible for COBRA after January 1, 2020 to notify them of the impact of the Outbreak Period relief (including the last day to elect coverage and to pay applicable premiums, if known)
- Update Claims Procedures to account for revised deadlines for initial claims, appeals, requests for external review and response to incomplete request for external review taking into account the Outbreak Period;
- Communicate with COBRA administrator, plan administrator and claims administrator, insurer, as applicable, to ensure that the new guidance is implemented correctly; and
- Consider sending out a participant communication summarizing the Outbreak Period relief to make sure that individuals are aware of the impact of the relief while the above steps are being completed.
Finally, the DOL recommends that group health plans notify participants and beneficiaries losing coverage of the opportunity to obtain coverage through the Health Insurance Marketplace noting that the President recently issued Executive Order 14009 which opens a special enrollment period for consumers in 36 states (including Arkansas) that runs from February 15 to May 15, 2021.
If you have any questions about the Outbreak Period Relief or how to implement the next steps please either Joshua M. Osborne or Alexandra A. Ifrah
Joshua M. Osborne is a partner in the firm’s Employee Benefits and Executive Compensation Practice Group. His practice focuses on providing counsel to clients on all aspects of their welfare benefits, retirement plans and executive compensation arrangements.
Alexandra A. Ifrah is a partner in the Employee Benefits Practice Group of Friday, Eldredge & Clark and serves on the firm's Management Committee. Since joining the firm in 1999, Alexandra has concentrated her practice on the representation of employers from a myriad of industries in complex employee benefits, taxation and executive compensation matters.
Disclaimer: The information included here is provided for general informational purposes only and should not be a substitute for legal advice nor is it intended to be a substitute for legal counsel. For more information or if you have further questions, please contact one of our Attorneys.