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The DOL and IRS Issue Joint Rule Regarding Special Enrollment, COBRA, and Claims Review Deadlines

May 8, 2020


Published in the Federal Register on May 4, 2020, the Joint Rule provides for the extension of certain deadlines so plan participants, beneficiaries, and employers have additional time to make critical health coverage and other decisions affecting benefits during the COVID-19 outbreak. The Joint Rule also provides for certain relief for plan sponsors and administrators.

The Joint Rule defines the period from March 1, 2020 until 60 days after the announced end of the National Emergency or other such date announced by the Agencies as the Outbreak Period. All group health plans, disability, and other welfare plans and employee retirement plans subject to ERISA, or the Code, must disregard the Outbreak Period for plan participants, beneficiaries, qualified beneficiaries, or claimants in determining the following periods and dates:

1. Special Enrollment Period Under HIPAA

HIPAA generally requires that a special enrollment period be offered in certain circumstances, including for example when an employee or dependent loses eligibility under a group health plan or other health insurance coverage in which the employee or the employee’s dependents were previously enrolled. This special enrollment period must allow such individuals to enroll in the group health plan (provided they meet plan eligibility requirements) if the enrollment is requested within 30 days of the of the event (or within 60 days, in the case of the special enrollment rights added by the Children’s Health Insurance Program Reauthorization Act of 2009).

By disregarding the Outbreak Period, group health plans are required to honor the special enrollment request provided the request is received with in 30 days from the end of the Outbreak Period.

2. COBRA Elections, Premium Payments, and Employee Notice of Events

COBRA Election

COBRA continuation coverage must generally be elected by a qualified beneficiary within 60 days of the date the COBRA election notice is provided by the plan administrator or third- party provider.

The Outbreak Period is ignored in determining the 60-day deadline. If the qualifying event occurs during the Outbreak Period, the deadline will be 60 days after the end of the Outbreak Period affording individuals a much longer period in which to elect continuation coverage.

COBRA Premium Payments

A qualified beneficiary generally has 45 days from the date they elect continuation coverage to make their first premium payment. After the initial 45-day premium period, there is a 30-day grace period for payment of the COBRA premium each month.

Once again, the Outbreak Period is ignored in determining the deadline for payment of COBRA premiums.

The Joint Rule provides the following examples which assume that the National Emergency ended on April 30, 2020 and the Outbreak Period ends on June 29, 2020:

Example:

(i) Facts. 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)?

(ii) Conclusion. 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 she timely makes payment. 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.

Example:

(i) Facts. Same facts as the above example. By July 29, 2020, Individual C made a payment equal to two months’ premiums. For how long does Individual C have COBRA continuation coverage?

(ii) Conclusion. Individual C is entitled to COBRA continuation coverage for March and April of 2020, the two months for which timely premium payments were made, and Individual C is not entitled to COBRA continuation coverage for any month after April 2020. Benefits and services provided by the group health plan (e.g., doctors’ visits or filled prescriptions) that occurred on or before April 30, 2020 would be covered under the terms of the plan. The plan would not be obligated to cover benefits or services that occurred after April 2020.

Employee Notice of Event Obligations

COBRA requires that covered employees or qualified beneficiaries must notify the plan administrator within 60 days after certain qualifying events (such as divorce or a dependent ceasing to qualify as a dependent) or a determination of disability in order to make continuation coverage available.

 For purposes of these deadlines, the Outbreak Period is ignored in the same manner as it is ignored for election and payment deadlines described above.

3. Claims Procedures Deadlines

ERISA-covered employee benefit plans (including group health plans) are required to maintain a procedure for the filing and review of benefit claims, and to provide claimants with a reasonable opportunity to appeal an adverse benefit determination to a named fiduciary.

The Joint Rule provides that the Outbreak Period is disregarded in determining:

    1. Any plan required deadline for a participant to make an initial claim;
    2. The applicable 180/60 day deadline to appeal an adverse benefit determination;
    3. The deadline to request an external review of a health plan claim; and
    4. The deadline within which a claimant may file information to perfect a request for external review.

The Joint Rule highlights the application of these changes in the following examples:

Example (Claims for Medical Treatment):

(i) Facts. Individual D is a participant in a group health plan. On March 1, 2020, Individual D received medical treatment for a condition covered under the plan, but a claim relating to the medical treatment was not submitted until April 1, 2021. Under the plan, claims must be submitted within 365 days of the participant’s receipt of the medical treatment. Was Individual D’s claim timely?

(ii) Conclusion. YesFor purposes of determining the 365-day period applicable to Individual D’s claim, the Outbreak Period is disregarded. Therefore, Individual D’s last day to submit a claim is 365 days after June 29, 2020, which is June 29, 2021, so Individual D’s claim was timely.

Example (Internal Appeal Disability Plan):

(i) Facts. Individual E received a notification of an adverse benefit determination from Individual E’s disability plan on January 28, 2020. The notification advised Individual E that there are 180 days within which to file an appeal. What is Individual E’s appeal deadline?

(ii) Conclusion. When determining the 180-day period within which Individual E’s appeal must be filed, the Outbreak Period is disregarded. Therefore, Individual E’s last day to submit an appeal is 148 days (180 – 32 days following January 28 to March 1) after June 29, 2020, which is November 24, 2020.

Example (Internal Appeal Employee Pension Benefit Plan):

(i) Facts. Individual F received a notice of adverse benefit determination from Individual F’s 401(k) plan on April 15, 2020. The notification advised Individual F that there are 60 days within which to file an appeal. What is Individual F’s appeal deadline?

(ii) Conclusion. When determining the 60-day period within which Individual F’s appeal must be filed, the Outbreak Period is disregarded. Therefore, Individual F’s last day to submit an appeal is 60 days after June 29, 2020, which is August 28, 2020.

4. Extension of Time for Employers and Plan Administrators

The Joint Rule allows provides relief for group health plan sponsors and administrators. COBRA generally requires that the employer notify the plan administrator within 30 days of a qualifying event. The administrator would then have 14 days to provide the COBRA election notice for a combined 44-day period.

The above notice period is disregarded during the Outbreak Period. The Joint Rule does not provide any other information or guidance on this issue. Until additional guidance is issued, plan sponsors and administrators should be mindful of their fiduciary obligations and the DOL’s prior guidance stating that the guiding principle for plans must be to act reasonably, prudently, and in the interest of the covered employees and their families who rely on their health, retirement, and other employee benefit plans for their physical and economic well-being.

Montgomery McCracken attorneys are available to assist clients with numerous issues related to COVID-19. Visit the firm’s Coronavirus (COVID-19) Resource Center for more information and updates on this constantly evolving situation.