In May of 2020, the Department of Labor (DOL) issued two separate pieces of guidance that both affect how health & welfare plans comply with the COBRA regulations. First, the DOL updated the model COBRA notices that must be provided to participants when they enroll and when they experience a “qualifying event.” Second, and in response to the COVID-19 pandemic, the DOL issued emergency regulations that extends many of the deadlines that apply to ERISA plans, including the ability to elect COBRA continuation coverage. We will discuss both these changes.
Updated Model Notices
The COBRA regulations require ERISA health and welfare plans to give participants two different notices: (1) upon enrollment and (2) after the participant experiences a “qualifying event.” To help plans meet these obligations, the DOL created model notices that plans can use in both situations. Most plans will include the enrollment model notice in their Summary Plan Description (“SPD”). The plan will then comply with the initial enrollment notice requirement simply by giving participants a copy of the SPD when they are eligible to participate. On the other hand, the “qualifying event” COBRA notice is separate and is sent when the participant experiences one of events listed in the COBRA statutes. Generally speaking, these “qualifying events” include the following situations which result in loss of coverage:
- Death of the covered employee;
- Termination of the covered employee’s employment or a reduction in hours;
- The employee becoming entitled to Medicare;
- Divorce or legal separation;
- Loss of dependent child status (i.e., adult child reaches age 26)
In this latest bit of guidance, the DOL updated both model notices. Those notices can be found on the DOL’s website at the links below. Essentially, the model notices were updated to include information about Medicare eligibility and the premiums credits under the Affordable Care Act. The DOL was concerned that participants may be uniformed about other coverage options. That could lead a participant with health concerns (or a family member with health issues) to elect COBRA continuation coverage when an otherwise less costly option is available.
Finally, and thankfully, complying with new guidance is relatively simple. When a participant experiences a qualifying event, the Plan Administrator should simply send the new updated Model COBRA Notice. When it comes to the enrollment notice, plans have two choices. First, they can amend the SPD to include the new model language. Secondly, they can leave the SPD alone and distribute the new updated model notice to new participants.
As noted above, the model notices can be found at the DOL’s website at the following links:
Emergency Regulations Extending ERISA Deadlines
As mentioned in the opening paragraph, the DOL also issued emergency regulations that extended various deadlines under ERISA. The regulation tolls the deadlines in ERISA plans with respect to filing claims, appeals (both internal and external), special enrollment requests, and COBRA elections and payments. Under the new rules, if the deadline would have occurred after March 1, 2020, then it is extended until sixty (60) days following the end of the National Emergency declaration by the President of the United States. As of the date of posting, this National Emergency (due to COVID-19) is still in effect.
Under the normal COBRA rules, a participant generally has sixty (60) days after a qualifying event to elect COBRA continuation coverage. However, under the emergency regulations, this deadline is extended until sixty (60) days after the National Emergency declaration is lifted! That means, for example, a participant who loses coverage under the Plan in February could technically wait until the end of the 60 days following the end of the National Emergency to elect COBRA, which could be a period of 12 months or longer. This could lead to increased risk to the Plan of adverse selection when it comes to COBRA continuation coverage. Unfortunately, there is no way to eliminate this risk and plans must be prepared in the event that a terminated participant with costly medical issues elects COBRA beyond the normal sixty (60) day deadline.