There has been a flurry of class action lawsuits and settlements relating to the deficiency of required election notices under the Consolidated Omnibus Budget Reconciliation Act (COBRA). The notices provide employees and their beneficiaries who participate in an employer’s group health plan with the option to elect to continue their coverage following a COBRA qualifying event. A recent class action lawsuit illustrates the stakes and provides some valuable lessons.
The Biden administration previously announced its intent to end the COVID-19 National Emergency (NE) and the COVID-19 Public Health Emergency (PHE) on May 11, 2023 (read our series introduction for more information). On April 10, 2023, President Biden signed a resolution moving up the end of the NE to April 10, 2023 (the PHE ended on May 11). The US Departments of Labor (DOL), Health and Human Services, and the Treasury (the Departments) issued a set of FAQs (available here) on March 29, 2023 (FAQs), which anticipated that the NE would end on May 11, 2023 (see our prior article explaining the FAQs). Plan sponsors should continue to treat May 11 as the end of the NE consistent with the FAQs until the Departments say otherwise.
During the COVID-19 pandemic, the Departments provided relief from certain benefit plan deadlines, including:
This article discusses how the affected tolled deadlines will be phased out and what actions employers may need to take.
BACKGROUND
EBSA Disaster Relief Notice 2020-01, later extended by EBSA Disaster Relief Notice 2021-01, provided that the deadline by which action needs to be taken for the events described above was tolled until the earlier of: (i) one year from the date the deadline would have first started running for that individual or (ii) sixty (60) days from the end of the NE (the Outbreak Period). This guidance created a tolling deadline specific to each affected individual. Where the individual has not reached the one-year anniversary of the date of the initial deadline, timeframes will begin to run again sixty (60) days after the end of the NE (i.e., July 10, 2023).
The FAQs released by the Departments at the end of March provided much-needed clarification and various helpful examples for employers of how the outbreak period should be taken into consideration when calculating the tolled deadlines. For example, if an employee experiences a qualifying event under COBRA and loses coverage on April 1, 2023, the deadline for the individual to make a COBRA election is tolled until the earlier [...]
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The Biden administration has announced its intention to end the COVID-19 National Emergency (NE) and the COVID-19 Public Health Emergency (PHE) on May 11, 2023 (read our series introduction for more information).
On March 29, 2023, the US Departments of Labor, Health and Human Services, and Treasury (the Departments) issued a set of Frequently Asked Questions (available here), which answered questions from stakeholders relating to the various laws, regulations and other guidance enacted or adopted in connection with the NE and PHE. The FAQs include eight questions related to the anticipated end of the “Outbreak Period” on July 10, 2023, which is 60 days after the end of the NE and PHE on May 11 (rules regarding the Outbreak Period are set forth in our earlier articles here and here). Below are the highlights:
To keep employers apprised of the rules and to assist with providing notice to plan participants of the changes that will accompany the end of the NE and PHE, the Department of Labor has issued two blog posts, which are available here and here.
Action Items: We urge plan sponsors to pay particular attention to notifying employees of the upcoming changes that will accompany the end of the PHE and NE and to ensure that participants covered under an HDHP understand that they may continue to contribute to their HSAs. Employers should consider communicating these changes to their employees.
For any questions regarding the end of the PHE and/or NE, please contact your regular McDermott lawyer or one of the authors.
A key feature of the COVID-19 National Emergency (NE) and the COVID-19 Public Health Emergency (PHE) was the government’s ability to provide access and coverage of COVID-19 tests. This resulted in overlapping legislation targeted at providing tests to benefit plan participants for free.
With the end of the NE and PHE set for May 11, 2023, there is confusion about what will happen to COVID-19 testing.
Starting on March 18, 2020, the Families First Coronavirus Response Act (FFCRA) required all public and private insurance coverage, including self-funded plans, to cover COVID-19 tests and costs associated with diagnostic testing with no cost-sharing for the duration of the PHE. The Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted shortly after expanded this requirement to cover out-of-network tests during the PHE. The Consolidated Appropriations Act of 2021 (CAA) then took a new approach and applied the requirement to over-the-counter (OTC) COVID-19 tests and added additional obligations. Under guidance issued by the US Departments of Labor, Health and Human Services, and Treasury, effective January 15, 2022, health plans were required to cover up to eight free OTC at-home tests per covered individual per month. Health plans could limit the reimbursement of these tests to the lesser of the actual or negotiated price or $12 per test. Health plans could also provide tests through participating network providers, such as pharmacies or retailers.
When the PHE ends, health plans will no longer be required to cover COVID-19 tests, either diagnostic or OTC, or testing-related services with no cost-sharing.
Employers should consider whether they want to continue to cover COVID-19 tests as required by a doctor or OTC without cost sharing. There is no requirement to stop doing this after the PHE but doing so may have some implications on group health plans. Importantly, if an employer decides to continue covering testing at no cost, they should consider how this affects any employer-sponsored high-deductible health plan (HDHP). IRS Notice 2020-15 permitted HDHP coverage of COVID-19 testing with no cost-sharing without conflicting with HSA eligibility (see our article here). This relief continues until further guidance is issued. Though COVID-19 testing could be considered preventative care under Section 223 of the Internal Revenue Code, the US Department of Treasury will need to provide further clarification. Employers should also consider whether they want to continue to apply a $12 reimbursement cap on COVID-19 or some other limitation.
After the PHE, employers who choose to continue to cover COVID-19 tests at no cost or apply a reimbursement cap may need to amend their plans or summary plan descriptions for these practices. They will also need to coordinate with any insurer or third-party administrator of the employer’s group health plan to ensure proper administration. Depending on the timing of these amendments, they may also need to provide a summary of material modifications to participants. Employers who decide not to continue coverage of COVID-19 tests or apply a reimbursement cap may need to amend their plans, depending on whether [...]
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On January 30, 2023, the Biden administration announced its intention to make final extensions of both the COVID-19 National Emergency (NE) and the COVID-19 Public Health Emergency (PHE) through May 11, 2023, at which point both will end. These emergency declarations have been in place for nearly three years and have enabled the government to modify certain coverage requirements by Medicare, Medicaid and private insurance plans, as well as benefits administration rules. The end of the PHE and NE may mean added costs for benefits plans and new questions regarding compliance. This series will explore the implications of the PHE and NE and what their impending end may mean for benefit plan sponsors with articles released periodically before May 11.
There are several important benefit coverage and administration requirements connected to the PHE and/or NE that may remain the same, remain for a temporary period or may need to be discontinued upon the end of these federal emergencies. Over the course of the upcoming weeks, we will cover the key topics that may be triggered by the end of the PHE and/or NE, including:
Note that the items covered above are not an exhaustive list of all legislative and regulatory changes that could affect employee benefit plans. This series is meant to keep employers informed about some of the most important upcoming changes and the impending decisions and disclosures that need to be made.
For any questions regarding the end of the PHE and/or NE, please contact your regular McDermott lawyer or one of the authors.
In Notice 2021-58, the Internal Revenue Service clarified that the one-year tolling relief periods for Consolidated Omnibus Budget Reconciliation Act (COBRA) elections and initial premium payments run concurrently, not consecutively. This means that a qualified beneficiary generally will have only one year of total disregarded time for the election and initial payment periods.
On May 18, 2021, the Internal Revenue Service (IRS) issued much-anticipated Notice 2021-31 (the Notice) regarding the Consolidated Omnibus Budget Reconciliation Act (COBRA) premium subsidy provisions of the American Rescue Plan Act of 2021 (ARPA). Under ARPA, a 100% COBRA premium subsidy and additional COBRA enrollment rights are available to certain assistance eligible individuals (AEIs) during the period beginning on April 1, 2021, and ending on September 30, 2021.
The US Department of Labor (DOL) has previously issued model notices and a set of FAQs regarding the COBRA premium subsidy. The IRS has now issued additional FAQs in the Notice that apply to employers and plan sponsors.
On February 18, 2021, the Internal Revenue Service (IRS) issued clarifying guidance on the temporary special rules for health flexible spending arrangements (FSAs) and dependent care assistance programs (DCAPs). This provides welcome guidance regarding the application of cafeteria plan relief provided by the Consolidated Appropriations Act (CAA).
On March 10, 2021, US Congress finalized and passed the American Rescue Plan of 2021 (ARPA), the latest COVID-19 relief package that largely tracks President Joe Biden’s initial $1.9 trillion proposal. The ARPA extends unemployment insurance benefits and provides direct $1,400 stimulus payments to qualifying Americans, but it also makes several important health policy-related changes. These include providing funding for vaccine distribution and testing to combat the COVID-19 pandemic, making policy adjustments to the Medicaid program, facilitating health insurance coverage and providing more money for healthcare providers. The final bill also makes two narrowly focused technical Medicare payment changes.
This summary highlights notable health policy provisions of the final bill.
For more information, please contact Meg Gilley, Mara McDermott, Kristen O’Brien, Katie Waldo, Rodney Whitlock or Eric Zimmerman.
On March 11, 2021, President Joe Biden signed the American Rescue Plan Act of 2021 (ARPA) providing Consolidated Omnibus Budget Reconciliation Act (COBRA) reform provisions and an increase in Dependent Care Assistance Program (DCAP) maximum deferrals. While details from the agencies are forthcoming, here is an overview of these provisions of the ARPA.
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