Don’t Restart the Clock Just Yet – COBRA, HIPAA, Other Deadlines Might Be Further Extended!

Nelson Mullins Riley & Scarborough LLP

At the last minute, certain suspended COBRA, HIPAA and claims procedure deadlines that were set to expire on February 28, 2021 have been further extended.

As we discussed [here], last year the Department of Labor (DOL) and Internal Revenue Service (IRS) issued guidance that suspended certain deadlines that normally apply to health plans, disability plans, welfare benefits plans and employee pension plans (“COVID Deadline Suspensions”). Those COVID Deadline Suspensions included:

  • COBRA – election, payment and notification of qualifying event
  • HIPAA – special enrollment periods and elections
  • Health plan external review process
  • Claims procedures – making a claim, appeals and other deadlines in claims procedures

The COVID Deadline Suspensions applied during the “Outbreak Period,” which was defined as the period beginning March 1, 2020 and ending 60 days after the end of the National Emergency declared on March 13, 2020. Thus, for example, a former employee who began her 60-day period to elect COBRA on Feb. 18, 2020 (10 days before the Outbreak Period began) would have until 50 days (the remainder of her 60-day election period) after the Outbreak Period ended to elect COBRA.

What very few people focused on (likely because few envisioned that the pandemic would still be going strong a year later), was that the law that allowed the IRS and DOL to implement these COVID Deadline Suspensions also contained a one-year outside limit on any suspension that was granted. It was unclear how this 1-year limit was to apply, and so the prevailing view was that COVID Deadline Suspensions must end on February 28, 2021 for everyone and the remainder of their deadline period must begin to run.

One Year Limit Applies from Original Deadline.

In response to pressure from practitioners, at the eleventh hour, the DOL and IRS have issued EBSA Disaster Relief Notice 2021-01, which clarifies that the one-year limit on the COVID Deadline Suspensions will apply separately to each individual and plan. The explanation and examples provided in this Notice make clear that deadlines are suspended until the earlier of one-year from the time the deadline would have originally expired for that individual or plan (if not for the original COVID Deadline Suspensions), or the end of the Outbreak Period. For example, if a former employee would have had until Sept. 1, 2020 to elect COBRA, under the COVID Deadline Suspensions she now has until the earlier of Sept. 1, 2021, or the end of the Outbreak Period, to elect COBRA.

Plan Fiduciary/Plan Administrator Obligation to Notify.

While last year’s guidance was silent as to any duty that plan administrators or other plan fiduciaries might have to notify affected individuals about the COVID Deadline Suspension, this new guidance suggests that plan administrators and other plan fiduciaries may have the following duties:

  • make reasonable accommodations to prevent the loss of or undue delay in payment of benefits,
  • take steps to minimize the possibility of individuals losing benefits because of a failure to comply with deadlines,
  • notify individuals regarding the end of their suspension period,
  • reissue or amend prior notices that did not accurately inform affected individuals about their deadlines, and
  • make individuals who are losing coverage under group health plans aware that other coverage options may be available, including the Health Insurance Marketplace (which in most states now is offering an extended special enrollment period through May 15).

The DOL also acknowledged that there may be instances where plans and service providers are not able to comply with disclosure or claims processing requirements due to the COVID pandemic or other natural disaster-related disruption and indicated that it would allow leeway in such situations if fiduciaries have acted in good faith and with reasonable diligence under the circumstances.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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