Third party benefits administrators need to be aware of the upcoming end to the COVID-19 outbreak period for group health plans. This deadline, which ends February 28, 2021, could cause unfamiliar administrative burdens on TPAs.
In May 2020, following the passage of the CARES Act, the IRS and DOL issued a joint notice on COVID-19 deadline extensions for ERISA. The February 28 end date is based on the CARES Act, which determined the outbreak period began on March 1, 2020. The extension was to be in effect no longer than 365 days.
The approaching deadline may have some significant implications for ERISA benefits such as COBRA insurance, Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs). While the pandemic is still ongoing and new strains of the coronavirus have been identified, there has not yet been an announcement on whether the COVID-19 outbreak period will be extended further.
The following does not constitute legal advice. Please work with your qualified benefits counsel regarding your unique plan situations.
In April 2020, the IRS, Department of Labor, and other federal agencies released guidance on COBRA extensions and claims filing. According to the final notice:
Group health plans, disability and other employee welfare benefit plans, and employee pension benefit plans subject to ERISA or the Code must disregard the period from March 1, 2020 until 60 days after the announced end of the National Emergency or such other date announced by the Agencies in a future notice (the “Outbreak Period”) in determining the following periods and dates.
- 60-day election period for COBRA continuation coverage
- Date for making COBRA continuation coverage premium payments;
- Notification date for individuals to tell a health plan of a qualifying event or disability;
- Date for providing a COBRA election notice from group health plan sponsor or administrator
The deadline calculator restarts on March 1, 2021.
COBRA Deadline Calculations and Communications
Prior to the end of the extension, administrators and plan sponsors should consider a couple of things:
- How will individual deadlines be calculated? The extension rules allow plans to count any days in election or premium payment periods that elapsed before March 1, 2020 in determining the time remaining after the outbreak period ends. This approach could be complicated to administer, especially if the outbreak period end dates are different for different parts of the country.
- Will we need to send special communications about the extension? Currently, agency guidance does not require plans to send corrected election notices or other special communications to people impacted by the deadline extension. However, administrators may wish to send such notices to avoid potential breach of duty claims.
Run Out Period for FSA and HRA Plans
The 60-day window may also apply to FSA and HRA plans for the run out period. Like COBRA, the deadline calculator restarts on March 1, 2021.
Separate from the mandated extensions, employers do have the option to modify their plans to allow for unlimited carryover for 2020 plan years for health and dependent care FSAs. This rule was included in the Consolidated Appropriations Act, 2021, passed in late December 2020. Employers must submit an amendment to update their plans.
Recommendations for TPAs
Currently, the new administration and Congress have not indicated whether they plan to address these dates. This situation may be fluid. Congress may decide to take a wait-and-see approach, and extend the COVID-19 outbreak period deadline each 30-day period.
Contact your qualified benefits counsel to determine the best direction for your employer plans.
DataPath, Inc. creates flexible cloud-based software solutions for COBRA and CDH account administration.