Employers face uncertainty over the expiration of COVID-19 relief that the U.S. Department of Labor (DOL) and the Internal Revenue Service (IRS) published in a joint directive on May 4, 2020.
The joint directives require that employee benefit plans take or suspend certain deadlines during the “epidemic period,” which the directives define as the period beginning March 1, 2020 and ending on the date that is “60 days. after the announced end of the national emergency or on any other date announced by the [departments]. “As stated in the joint guidelines, the statutory authority of the DOL and IRS only allows for a one-year extension of these deadlines.
The deadlines subject to suspension or extension during the outbreak period are as follows:
- The deadline within which special membership in the employer’s group plan must be requested (for example, the deadline for registering a new spouse or child);
- Timeframes related to the continuation of coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA), including the 60-day election period, the payment schedule for continued COBRA coverage, and the period in which individuals must notify the plan of a second COBRA qualifying event or determination of disability;
- The date that “individuals can make a claim for benefits under the plan’s claim process” (often 365 days from the date the claim was made);
- The date on which claimants can appeal a denied claim under the plan’s claim process (often 180 days from the date they receive a denial of claim notice);
- The four-month period during which applicants for a non-grandfathered group health insurance plan “may file a request for external review following receipt of an adverse benefit determination or final internal determination. of unfavorable advantage ”; and
- The date on which an applicant for a non-grandfathered group health insurance plan “may submit information to complete a request for external review if it finds that the request was not complete” (the latest of the initial period of four months or 48 hours after receiving notice of incomplete filing).
As the national emergency is not over and neither the DOL nor the IRS weighed in on the expiration of the relief provided in the Joint Guidelines, employers are left without formal guidelines on administration. of their benefit plans with regard to the deadlines described above.
Employers can take one of the following two approaches to determine the impact of expiring relief in the Joint Guidelines on Time Limits above:
- Approach 1
The outbreak period expires on February 28, 2021 for all of the deadlines listed above, and the clock for those deadlines starts running again on March 1, 2021. Here is an example:
- June 1, 2020: The participant gave birth.
- July 1, 2020: This is the normal deadline before which the participant must request the registration of the child in the participant’s group health plan.
- Since the participant gave birth during the outbreak period, her special enrollment period under the Health Insurance Portability and Accountability Act (HIPAA) is set for March 1, 2021, the date the regulatory relief expires. .
- March 1, 2021: On this date, the participant’s special HIPAA registration period begins.
- March 31, 2021: This is the participant’s last day to enroll her child in the plan. Membership would be effective retroactively to June 1, 2020, assuming all required premiums are paid. *
* If a participant takes advantage of the extended deadline and enrolls a child after the normal 30-day deadline, several months of premiums may be paid soon after the outbreak period ends. Participants may not be able to make such payments, but it is not clear that they would benefit from other extensions to pay the compensation payments (especially with regard to insured benefits). The same problem arises with regard to the COBRA top-up premium payments. Advice from DOL and IRS in this regard would be welcome.
Note that “clocks” that were running on March 1, 2020 would not be reset to 0 on March 1, 2021, but would simply restart on that date. For example, if a participant gave birth on February 15, 2020 (meaning 14 days had passed before March 1, 2020), the participant would only have 16 days, starting March 1, 2021, to enroll her child in the plan according to the first approach.
- Approach two
The one-year limit in the joint guidelines applies to each deadline separately (i.e. on a case-by-case basis). This interpretation leads to a different result:
- June 1, 2020: The participant gave birth.
- July 1, 2020: This is the normal deadline before which a participant must request the enrollment of a child in the participant’s group health plan.
- Unless the President or IRS and DOL announce an early end to the outbreak period, the participant’s special HIPAA enrollment period is one year, until June 1, 2021.
- June 1, 2021: This is the date the participant’s special HIPAA enrollment period begins.
- July 1, 2021: This is the participant’s last day to enroll her child in the plan. Membership would take effect retroactively to June 1, 2020, assuming all required premiums are paid.
During an informal conversation, an IRS agent indicated that there was the possibility of a 60-day “pad” after March 1, 2021, which would essentially meet the above deadlines of 60 additional days after March 1, 2021. Although the Internal Revenue Code contains a possible legal justification for this position for the IRS, there is no similar provision in the Employee Retirement Income Security Act. (ERISA) for the DOL. The above issues may be addressed in an update to the IRS / DOL Joint Guidelines.
Employers will want to think about how to proceed with these timelines, especially if there is no interim direction from departments. The more conservative approach may be for employers to run their benefit plans as if the clock on the above time frames were restarted on March 1, 2021. Employers may also consider distributing targeted communications to plan members who are affected by the expiration of the time limit. extensions.