Final Rule Impacts Employee Benefit Plans, Aimed at Providing Relief during COVID-19 Pandemic
By Michael Sullivan and Rachel Dowling
The U.S. Departments of Labor and Treasury issued a Final Rule on May 4, 2020, to provide certain extensions related to employee benefit plans during the COVID-19 pandemic. The extensions are intended to continue providing relief for plan participants, beneficiaries, qualified beneficiaries and claimants. The group health plan timeframes noted below are temporarily extended for the duration of the outbreak period, starting March 1, 2020 and lasting through 60 days after the announced end of the COVID-19 national emergency.
Several of these extensions directly impact COBRA beneficiaries and plan sponsors/administrators.
Extensions for COBRA beneficiaries
- 60-day election period for COBRA
- COBRA premium due date, including the 45-day period for the initial payment, and the 30-day period for monthly payments
- 60-day notification of qualifying event or disability determination
Although these extensions provide additional time for COBRA beneficiaries to take action, beneficiaries do not have to wait. To help ensure seamless continuation of coverage, qualified beneficiaries can continue to elect coverage, notify their employer or COBRA administrator of any qualifying events, and pay monthly premiums as usual. Once the outbreak period ends, any unpaid premiums will be due within 30 days for active COBRA coverage or within 45 days of electing coverage. COBRA beneficiaries who do not want to elect or continue their COBRA coverage should consider notifying their employer or COBRA Administrator.
If, as an example, the outbreak period ends June 29, 2020, the COBRA election period would begin June 29, 2020 and end Aug. 28, 2020.
Given the same outbreak period, if a qualified beneficiary had paid COBRA premiums through February, premiums for March to June are considered timely if made within 30 days, by July 29,2020. However, premiums must be paid for all four months by that date to keep coverage.
Extensions for COBRA plan sponsors or administrators
- 14-day election notice period (or 44 days if plan sponsor is also the administrator)
Although relief is given to plan sponsors, they should consider following the usual process for election notices. Qualified beneficiaries can continue to elect COBRA coverage during the extension, and providing timely election notices can help ease this process. Note that there is no extension for initial COBRA notices. These notices should be provided to new health plan enrollees as usual.
Additional guidance on the extended timeframes is expected. At this time, among other open questions, there is no guidance stating that any COBRA notice changes or additional notice to current participants are required, or on when coverage is active for beneficiaries who have elected COBRA during the extension but have not paid the premium.
Final Rule extends other health plan timeframes
- 30-day period to request a special enrollment
- The date for individuals to file a benefit claim under their group health plan
- The date for individuals to request an appeal or external review for an adverse benefit determination under the health plans’ claims procedure, or to provide additional information upon notification of an incomplete external review request
Paychex will continue to monitor legislation during the COVID-19 pandemic that could further impact healthcare coverage. As an industry leader in HR Services, we offer resources and solutions to help businesses stay compliant.
Michael Sullivan is a supervisor in Insurance Compliance Research and Rachel Dowling is a compliance analyst in Risk Management for Paychex.