Many people are wondering if ERISA, COBRA and certain HIPAA timeframes paused during the “outbreak period” will soon expire or restart. Unfortunately, it’s a question without a clear answer that is creating anxiety among employer plan sponsors.
You may recall last spring when a Joint Notice issued by DOL and Treasury required employee benefit plan sponsors and administrators to disregard the outbreak period when determining certain deadlines for individuals and participants to invoke HIPAA special enrollment rights, file claims for benefits, appeal and request external reviews of denied claims, and elect and pay for COBRA continuation coverage. At the same time, DOL Notice 2020-01 granted employers, plan sponsors, fiduciaries, and service providers extra time to provide required notices and disclosures — for example, SMMs and SPDs — and complete certain other plan-related actions required by Title I of ERISA. Specifically, the guidance provided that the outbreak period would not count towards the otherwise applicable deadlines.
The outbreak period was defined as the period from March 1, 2020, through 60 days after the announced end of the COVID-19 National Emergency, subject to the limitations of ERISA §518. The National Emergency declaration was due to automatically terminate on its anniversary date – March 1, 2021 – but was extended by President Biden for another year (unless terminated earlier by congressional or presidential action). But, ERISA §518 limits the agencies’ ability to provide relief of the sort described above to no more than one year. A similar 1-year limitation on deadline suspension periods exists in the Internal Revenue Code (IRC). So even though the National Emergency has been extended, ERISA (and the IRC) may require Feb. 28, 2021, to be the last day of the outbreak period, not 60 days from the end of the National Emergency.
It seems clear that when the agencies provide the outbreak period relief last spring they didn’t think we’d still be in a National Emergency one year later. But here we are. So what does this mean for the end of the outbreak period?
Assuming we get no clarifying guidance from the agencies on the matter, these are the two most discussed interpretations:
To illustrate, let’s assume Sam experienced a COBRA qualifying event and was provided a COBRA election notice on April 1, 2020. Sam has 60 days to elect COBRA, but that period didn’t begin to run as it normally would because it occurred during the outbreak period. Under interpretation #1, Sam’s COBRA election period would begin running on March 1, 2021. Under interpretation #2, Sam’s 60-day COBRA election period would begin running on April 1, 2021, one year from the date the election notice was sent.
There’s no doubt that employer plan sponsors and administrators prefer interpretation #1, because it creates uniformity for everything that was paused during the outbreak period. Interpretation #2 is an administrative nightmare for employer plan sponsors and their vendors, but participant friendly.
Other possibilities worth mentioning are (i) the agencies issue new guidance clarifying that the extension of the National Emergency beyond March 1, 2021, requires the continuation of the existing outbreak period, or (ii) the agencies determine that a new outbreak period should begin on March 1, 2021. It’s not clear that there is authority under ERISA or the IRC to do the former, and the latter would be another administrative nightmare for plan sponsors and vendors, but nevertheless they are both possibilities.
So what’s an employer to do? If you haven’t done so already, check in with your plan administrators (TPAs, claims administrators and COBRA administrators), carriers (for fully-insured plans), stop-loss vendors (for self-funded plans, if applicable) and trusted advisors to develop a plan you all agree upon. Whatever the decision, communications to plan participants and other individuals relying on the outbreak period relief need to begin immediately, particularly if a specific end date was not previously communicated. Plan participants and other individuals should be informed of when exactly deadlines previously paused by the outbreak period will begin to run again.
More details on last April’s outbreak period relief can be found in our GRIST.