In this legal update, our employee benefits attorneys cover four recent health and welfare plan developments.
Outbreak Period to Be Applied on a One-Year Rolling Basis
Last spring, the U.S. Department of Labor (DOL) and Internal Revenue Service (IRS) issued a Joint Notice providing that certain employee benefit plan deadlines were being delayed due to the COVID-19 pandemic. Read our prior alert here. Deadlines delayed during the Outbreak Period (Outbreak Period Deadlines) are:
- HIPAA special enrollment deadlines
- Marriage (30 days after marriage)
- Birth/adoption/placement for adoption of child (30 days after birth/adoption/placement)
- Loss of other coverage (30 days after loss)
- Loss of Medicaid or SCHIP coverage (60 days after loss)
- Acquisition of Medicaid/SCHIP premium assistance (60 days after acquisition)
- ERISA claims and appeals
- Date by which claim for a benefit must be filed
- Date by which appeal must be made after initial adverse benefit determination
- Date to request external review
- Date to file additional information to perfect a request for external review
- Most COBRA deadlines delayed
- 60-day period to elect COBRA
- All COBRA payment deadlines (initial and ongoing)
- Deadlines for employee to notify GHP of divorce or dependent child losing eligibility
- Deadline to notify GHP of disability determination by SSA (for purposes of 11-month COBRA extension)
- Date to send out COBRA election notices
In EBSA Disaster Relief Notice 2021-01, the DOL updated its prior guidance and announced that the Outbreak Period will end on a rolling basis at the earlier of (1) one year after the original deadline or (2) 60 days after the announced end of the National Emergency. The Notice also states that the IRS, the Department of Treasury, and HHS concur with this rule. We do not know when the National Emergency will end, but it seems unlikely to be soon.
Thus, until the end of the National Emergency is announced, the Outbreak Period Deadlines are one year after the original deadline. For example, if the original deadline to make a COBRA premium payment was March 31, 2020, the new deadline to make the payment is March 31, 2021. If the original date by which a benefit claim was to be filed was July 1, 2020, the new deadline is July 1, 2021. If the original deadline to request a special enrollment due to marriage was April 30, 2020, the new deadline is April 30, 2021. However, new deadlines occurring after February 28, 2021 are still delayed. For example, if the original deadline for a COBRA payment is April 1, 2021, the new deadline will be April 1, 2022, unless the National Emergency ends more than 60 days before April 1, 2022.
Plan sponsors and administrators should consider getting this information to plan participants (including COBRA participants) as soon as possible, since some Outbreak Period Deadlines may occur this week. For plans subject to ERISA, the communication should be in the form of a summary of material modifications (SMM). Some employers may decide to provide the SMM to persons who are still eligible to elect COBRA (taking into account the Outbreak Period rules), but who have not yet elected COBRA.
State and local government plans are not subject to the Outbreak Period rules, and most such plans did not voluntarily adopt these rules.
UPDATE: Guidance on COVID-19 Diagnostic Testing Without Cost Sharing
The latest guidance from Centers for Medicare & Medicaid Services, together with the DOL and Department of the Treasury, makes clear that private group health plans and issuers generally cannot use medical screening criteria to deny coverage for COVID-19 diagnostic tests for individuals with health coverage who are asymptomatic, and who have no known or suspected exposure to COVID-19. Consistent with the Families First Coronavirus Response Act and CARES Act, such testing must be covered without cost sharing, prior authorization, or other medical management requirements imposed by the plan or issuer. For example, covered individuals who obtain a test from a licensed health care provider would be able to receive coverage for that test from their group health plan without paying cost sharing, even if the purpose of the test was to ensure they are COVID-19 negative prior to visiting a family member, traveling, or attending a concert or sports event.
This clarifies guidance from June 2020 that could have been interpreted to require coverage without cost sharing only for tests issued to asymptomatic individuals when those individuals had known or suspected recent exposure to SARS-CoV-2. Instead, the new guidance confirms testing should be covered anytime an individual seeks and receives a COVID-19 diagnostic test from a licensed or authorized health care provider, or when a licensed or authorized health care provider refers an individual for a COVID-19 diagnostic test.
Group Health Plans Can Offer 2021 Mid-Year Election Period
In January, we held a webinar on employee benefit provisions in the Consolidated Appropriations Act of 2021 (CAA). Contact your Stoel Rives attorney for a link to the webinar materials. In Notice 2021-15, the IRS clarified application of the relief in the CAA and announced the ability of cafeteria plans to allow mid-year election changes to medical, dental, and vision plan coverage (Health Coverage) without experiencing a change event during cafeteria plan years ending in 2021 (2021 Plan Year). Under these rules (which were not a part of the CAA), cafeteria plans can allow employees to change their Health Coverage mid-year during the 2021 Plan Year as follows:
- Make a new election for Health Coverage on a prospective basis, if the employee initially declined to elect Health Coverage;
- Revoke an existing election for Health Coverage and make a new election to enroll in different Health Coverage sponsored by the same employer on a prospective basis (including changing enrollment from a PPO to an HMO or from self-only to family coverage); or
- Revoke an existing election for Health Coverage on a prospective basis, provided that the employee attests in writing that the employee is enrolled, or immediately will enroll, in other Health Coverage not sponsored by the employer. The guidance includes a model attestation for this purpose.
These are all optional changes, and plans are not required to provide unlimited Health Coverage election changes. Instead, the plan sponsor may, in its discretion, determine the extent to which such election changes are permitted and applied, provided that any permitted election changes are applied on a prospective basis only. For instance, a plan may restrict a mid-year election change from one health plan to another to situations where doing so would result in increased or improved coverage after the change, or may allow a mid-year election change only during a specified time period, such as through the month of June. If a plan offers any of these mid-year election changes, they must be offered to participants on a nondiscriminatory basis.
Plan amendments will be required to document any changes that are adopted, along with related participant communications (for ERISA plans, a SMM).
UPDATE: Additional Guidance on FSA Relief Under CAA
Notice 2021-15 also discussed the types of changes to health care and dependent care flexible spending accounts (FSAs) that are allowed under the CAA, and provided additional information on the rules for carryovers and grace (or extended coverage) periods. Notably, the Notice (1) allows participants to decline carryover amounts and to decline grace period participation in health care FSAs in order to avoid ineligibility to make contributions to their HSAs and (2) clarified that the carryover amounts and amounts available from a previous plan year during a grace period do not count towards the statutory maximums in the current plan year for health care FSAs (for 2021, $2,750) and for dependent care FSAs ($5,000 for married couples filing joint tax returns). For example, a plan participant participating in a health care FSA can carry over $1,400 from the 2020 Plan Year into the 2021 Plan Year and also contribute $2,750 to a health care FSA in the 2021 Plan Year.