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.
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.
The US Department of Labor, in conjunction with the Internal Revenue Service and US Department of the Treasury, issued guidance and deadline extensions applicable to ERISA-governed group health and welfare plans. The guidance provides relief for plan sponsors, plan administrators and plan participants that may be struggling to comply with applicable deadlines and requirements in the midst of the chaos related to the COVID-19 pandemic.
On May 1, 2020, the Department of Labor (DOL) issued updated Frequently Asked Questions and revised model notices under the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA is a federal law that permits individuals to continue group health plan coverage for a limited period of time following certain events, such as a termination of employment, that are coupled with a loss of coverage. Employers are required to notify individuals of their rights under COBRA.
The changes in the model notices are primarily designed to help Medicare-eligible individuals understand their options for healthcare coverage. The model notices, however, do not include language that addresses DOL relief issued earlier in the week that provides additional time for individuals to elect COBRA coverage through the end of the coronavirus pandemic. Plan sponsors should work with their COBRA vendors and legal counsel to determine whether the model notice updates or coronavirus relief would necessitate any updates to the notices currently used by their group health plan to notify plan participants and beneficiaries of their rights under COBRA.
In Florida’s federal courts, there has been an epidemic of class actions alleging that employers failed to provide technically proper notice of the right to continued healthcare coverage under the Consolidated Omnibus Budget Reconciliation Act. A dozen such lawsuits have been filed (each by the same law firm) with mirror image allegations.
These cases illustrate why it is necessary to sweat the details in issuing COBRA notices, which McDermott’s Megan Mardy and Julie McConnell walk through in a recent analysis for Law360.
Originally published by Law360, October 2019
As the mid-way point of 2014 approaches, employers should actively turn their attention to several upcoming compliance obligations for the health and welfare benefit plans they sponsor. Following is a checklist of upcoming health and welfare compliance initiatives that require action by employers, including preparation for upcoming fees and penalties under the Affordable Care Act, the filing of required forms and distribution of relevant notices.
On May 2, 2014, the U.S. Department of Labor (DOL) Employee Benefits Security Administration (EBSA) issued proposed regulations which seek to amend the notice requirements under the Consolidated Omnibus Budget Reconciliation Act (COBRA). The changes are intended “to better align the provision of guidance under the COBRA notice requirements with the Patient Protection and Affordable Care Act (ACA) provisions already in effect, as well as any provisions of federal law that will become applicable in the future.”
Under COBRA, a group health plan must provide participants with a general COBRA notice and COBRA qualified beneficiaries with an election notice. These notices describe a qualified beneficiary’s right to continue coverage under a group health plan. On May 8, 2013, DOL issued Technical Release 2013-02, which included a series of model COBRA notices (see “Notice of Coverage Options Available Through the Exchanges” for more information). These model notices include references to the ACA, noting that some qualified beneficiaries (1) may want to consider and compare health coverage alternatives to COBRA continuation coverage that are available through the ACA exchanges and (2) may also be eligible for a premium tax credit to help pay for the cost of coverage.
The proposed regulations eliminate the current versions of the model notices. However, until the regulations are finalized and effective, the DOL will consider appropriately completed use of the model notices that are currently available on its website to constitute good faith compliance with the notice content requirements of COBRA. Once the current notices are available, they will be posted at the following links:
Note: Use of the model notices is not required.
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