COBRA, CLAIMS AND COVID-19
There is new COBRA guidance that applies to ALL GROUP HEALTH PLANS subject to federal COBRA. (See our recent client alert). Rules and FAQs were issued jointly by the IRS and DOL that reflect the COVID-19 environment and the possibility that qualified beneficiaries may not timely elect COBRA or pay COBRA premiums. This guidance essentially “stays” or “tolls” the timelines for COBRA elections for the period starting March 1, 2020 and ending 60 days after the date the President declares that the COVID-19 national emergency has ended. In the meantime, even if COBRA is not elected and/or COBRA premiums are not paid, group health care coverage for these qualified beneficiaries cannot be terminated. In separate guidance plan administrators have been given additional time to issue COBRA notices and election forms.
It is not clear whether COBRA notices need to be amended to advise qualified beneficiaries that they do not have to elect or pay for COBRA coverage until the end of the 60-day period after the national emergency ends. New model COBRA notices were also issued at the same time the joint agency guidance was issued, they include language explaining how COBRA interacts with Medicare but no provisions relating to the COVID-19 extended COBRA election and payment period.
Note that COBRA regulations permit the cancellation of coverage with retroactive reinstatement only after the qualified beneficiary elects COBRA coverage and pays all required COBRA premiums. Plan administrators of self-insured group health plans should make sure its COBRA processes and procedures (whether in-house or through a COBRA Administrator) comply with these requirements; and direct the plan’s third-party administrator to hold the payment of claims incurred by qualified beneficiaries until a COBRA election is made and all COBRA coverage payments are paid. Likewise, plan administrators of fully-insured group health care plans should work with the carrier to make sure the carrier knows that a former employee has experienced a qualified event and confirm that the carrier will comply with the new rules.
This same joint guidance also extends the timelines for claims processing and special enrollment elections.
All of these changes appear to have a limited shelf life. Therefore, until additional guidance provides otherwise, plan administrators and COBRA administrators may want to wait to update notices, election forms and summary plan descriptions.
If you have any questions about this post, please contact your regular Saul Ewing Arnstein & Lehr LLP Tax & Employee Benefits attorney.