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Outbreak Period Tolling Clarification and Considerations

The Department of Labor (DOL) and Internal Revenue Service (IRS) extended key employee benefits deadlines last April with the intention of stemming the tide of complexities presented by the COVID-19 pandemic but presented varying administrative and financial considerations.

This guidance is subject to the Employee Retirement Income Security Act (ERISA), which permitted the tolling of the deadlines to one year ending February 28, 2021. With two days to spare, the federal government released Disaster Relief Notice 2021-01 (Notice), illuminating the application of the one-year deadline and ushering in further intricacies.

Quick Background

The original guidance, Disaster Relief Notice 2020-01, tolled the following employee benefit deadlines through the Outbreak Period, which began March 1, 2020, at the start of the COVID-19 national emergency, and is set to end 60 days after the announced end of the emergency:

  • COBRA notices, elections, and payments
  • HIPAA special enrollments
  • Claims, appeals, and requests for external review

Clarification of Outbreak Period

The Notice explains that the Outbreak Period should be measured on an individual basis with the one-year tolling period (length of time where the running of a time period is legally paused–in this context, specifically referring to the pausing of key benefit deadlines) ending the earlier of:

  • one year from the date an individual is first eligible for the relief, or
  • the end of the Outbreak Period.

This means there is a mix of individuals who needed to take the required action as early as March 1, 2021, as late as 2022, or whenever the Outbreak Period ends. To illustrate this better, assume in the following examples that the Outbreak period ends May 1, 2022.

Example 1 – A COBRA-qualified beneficiary who would have been required to elect COBRA by March 1, 2020, has until March 1, 2021, to make this election.

Example 2 – An employee who would have been required to add his/her newborn into the employer-sponsored health plan by February 1, 2021, has until February 1, 2022, to add the newborn.

Example 3 - An employee who received treatment for a medical condition covered by the employer-sponsored health plan would have been required to submit a claim by December 1, 2021 has until May 1, 2022 to submit the claim.

While this cleared up much uncertainty, it continues to present various concerns for employers. The DOL stressed the reasonable administration of plans given the ongoing difficulties individuals continue to face during the pandemic and their reliance on access to medical care. In light of this, employers should reflect on the following and exercise vigilance by notifying individuals before they are denied a benefit.

Employer Considerations

Employee Considerations

Administration

Coordination with carrier/stop-loss provider/TPA for following:
  • Procedure for revised deadlines
  • Communication with plan participants (general vs. individual)
  • Updating forms/notices

 
DOL will emphasize compliance assistance as approach to enforcement

Individual clarity on timing of COBRA deadlines; HIPAA special enrollments; and filing claims, appeals, and requests for external review
 
Potential for inaccurate/untimely communication regarding deadlines due to administrative delays

Finance

Exposure to increased risk of adverse selection due to tolling
 
Pending COBRA claims implicate:
  • “Prompt pay” obligations under state insurance laws for insured plans ➝ pre-funding premiums
  • Stop-loss policies under self-funded plans ➝ paying claims prior to collecting premiums
Potentially responsible for COBRA premium payments earlier than expected
 
Change in payment amounts if turning to other options like Marketplace coverage after losing group health coverage earlier than expected

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