By: Kevin Brady, Esq.
Earlier this month, the U.S. Department of Labor (DOL) and the Internal Revenue Service (IRS) jointly issued a Final Rule extending a number of deadlines and timeframes relevant to group health plans. The Final Rule recognizes that as a result of the National Emergency, plan participants “may encounter problems in exercising their health coverage portability and continuation coverage rights, or in filing or perfecting their benefit claims. As such, the stated purpose of the Final Rule is “to minimize the possibility of individuals losing benefits because of a failure to comply with certain pre-established timeframes.”
The Final Rule essentially requires plans to disregard a designated period of time when determining whether certain deadlines or timeframes are satisfied. Consistent with the Final Rule’s stated purpose, the extension of these timeframes will provide additional opportunities for employees and their dependents to maintain existing, or enroll in, coverage as well as provide additional opportunities for participant’s to submit and appeal claims. This designated period of time is succinctly described as the “Outbreak Period” which entails “the period from March 1, 2020 until sixty (60) days after the announced end of the national emergency period or such other date announced by the Agencies in a future notification.”
Under HIPAA, employees who experience certain special enrollment events generally have a limited period of time (following the event) to request coverage under their employer’s plan. Under the Final Rule, the Outbreak Period must be disregarded when considering whether a HIPAA special enrollment request is timely.
Electing Continuation Coverage
Plan participants who experience “qualifying events” are generally eligible for continued coverage under COBRA subject to certain conditions. After receipt of the COBRA election notice, “qualified beneficiaries” have 60 days to elect continuation coverage. Under the Final Rule, plans must disregard the Outbreak Period when determining whether a qualified beneficiary’s election is timely.
Timely Payment of Premiums
After electing COBRA continuation coverage, qualified beneficiaries must pay their first premium payment with 45 days of their election. Furthermore, qualified beneficiaries must pay premiums in a timely fashion (a premium is considered paid timely “if it is made not later than 30 days after the first day of the period for which payment is being made.” Under the Final Rule, the Outbreak Period cannot be considered when determining whether payment of the premium is timely.
Notice of Qualifying Event
Under certain circumstances (generally divorce or a child losing dependent status), plan participants will bear the responsibility for notifying the group health plan of the qualifying event under COBRA. While COBRA typically requires this notice to be provided within 60 days, the Final Rule requires plans to disregard the Outbreak Period when determining whether notice is timely.
Claims and Appeals
Filing of Claims
Group health plans will generally limit the period of time in which a claim may submitted and considered eligible for coverage. Under the Final Rule, plans must disregard the Outbreak Period when considering whether a claim has been timely filed. This will undoubtedly lead to additional, and potentially significant exposure, for plans as claims that could have been properly denied previously, may now be payable under the plan.
Appealing an Adverse Benefit Decision
Group health plans must provide participants at least 180 days to appeal an adverse benefit decision. Whether a plan provides the required 180 days, or more, plans must disregard the Outbreak Period when determining this deadline. Similar to the extension of the deadline for filing claims, this extension may also lead to additional, and potentially significant, exposure for plans.
For claimants enrolled in non-grandfathered group health plans, those claims which are otherwise eligible for external review (only certain types of appeals are eligible), are entitled to additional time to request an external review under ERISA’s appeals procedure rules. Under the Final Rule, the Outbreak Period is disregarded when considering the deadline to file an external review.
Further, if a claimant’s external review request is not “complete” (meaning that the request for review is not sufficient to be considered by the Independent Review Organization) the claimant is typically limited to the duration of the filing period to perfect the request. However, the Final Rule also requires the plan to disregard the Outbreak Period when determining whether additional information, provided to perfect a request for external review, is timely.
By: Kevin Brady, Esq.
Similar to a number of my millennial counterparts, my introduction to “COBRA” coverage did not occur during a college class or work project, but rather as a 26 year old kid who had to face the reality that relying on my parent’s health care coverage wasn’t going to last forever. Although a bit more expensive for me, COBRA was relatively simple from the qualified beneficiary’s perspective. Unfortunately, COBRA is lot less simple when looking at it through an employer’s eyes, especially when that employer self-funds its group health plan.
Even at a first glance, employer responsibilities under COBRA do not appear overly complicated. Put simply, if an applicable employer offers a group health plan to its employees, and an eligible employee experiences a qualifying event (such as termination, a reduction in hours, or a dependent losing coverage due to age or divorce) the employer must provide continuation coverage on the group health plan coverage for that individual, in the same manner that was available to them before the qualifying event.
Upon deeper inspection, COBRA administration is actually a lot more complicated. There are various responsibilities imposed on several of the participating parties when a qualifying event occurs. Employers, qualified beneficiaries, and plan administrators all play important roles in ensuring COBRA is offered, and administered, correctly; but employers who self-fund their health plans bare the majority of the responsibilities as they are likely to be considered both the employer and the plan administrator in regards to COBRA’s regulations. It follows then, that employer sponsors bare the majority of the risk in the event of a failure to satisfy COBRA’s nuanced requirements.
One issue we see quite frequently involves the required “employer notice of a qualifying event.” When an employee experiences certain qualifying events (termination or reduction in hours) the employer must provide notice to the plan administrator. Once the plan has notice of the qualifying event it must then offer continuation coverage to the qualified beneficiary within 14 days.
In the self-funded world, the notice responsibility can sometimes be a bit confusing as the employer sponsor is playing multiple roles in the COBRA process. Employer sponsors should have processes in place to ensure that notices under COBRA and the resulting continuation coverage are properly administered or they risk inadvertently continuing coverage for individuals who are no longer eligible under the terms of the plan.
Employer sponsors risk both stop-loss reimbursement issues and fiduciary responsibility concerns if they continue to offer benefits to ineligible individuals. Employers risk direct liability for medical expenses incurred by an individual in the event the employer fails to provide notice to the plan administrator in a timely manner or not at all. On the other hand, as the plan administrator the sponsor could be liable for ERISA statutory penalties if the employer fails to offer coverage to a qualified beneficiary.
When employer sponsors offer group health plan coverage to their employees, they should be cognizant of the potential pitfalls that could arise when dealing with the various nuances that come with COBRA continuation coverage. A prudent employer sponsor will make sure it understands its role in the COBRA process as both an employer and a plan administrator.