You may recall that the Department of Labor and the IRS issued a Joint Rule at the end of April providing an extension of time for several participant deadlines under COBRA, HIPAA special enrollment rights, and the timeframes for certain other actions under ERISA covered health and welfare plans. This guidance requires employers and plan sponsors to disregard the “Outbreak Period” (defined as the period from March 1st, 2020, through 60 days after the end of the declared national emergency) for purposes of determining these plan deadlines. Specifically, as it relates to COBRA notice requirements, employers are asking whether or not they should send new COBRA notices to participants. Unfortunately, the guidance did not specifically address what required action an employer must take to comply with its disclosure requirements.
Some of the deadlines impacted by the Final Rule include:
- The time to a participant has to elect continuation of coverage (The normal general election period is 60 days);
- When a participant must make a payment for continuation of coverage (The normal timeframe is 45 days from the date of election to make an initial payment and subsequent payments must be made within a 30-day grace period); and
- The timeframe participants have to notify the plan of a COBRA event (This includes the normal 30-day timeframe to provide notice of divorce or a dependent loss of eligibility due to reaching the dependent limiting age) or disability determination.
While the guidance does not provide a clear stance on communication, COBRA’s general notice requirements provide some indication of the required action. COBRA provides that notices given to participants must reasonably reflect a participant’s rights and how continuation may be elected. Any information that misleads a COBRA participant could be seen as a violation of COBRA’s notice requirement and a failure of an employer’s fiduciary responsibility under ERISA. Prudent employers, at a minimum, should make an attempt to communicate the extension of time to COBRA participants or individuals that have experienced a qualifying event during the Outbreak Period.
Because there are not currently clear guidelines of the form and substance any communication about the extension must take, employers have some flexibility in how they communicate the extension of time to participants. Further, the DOL issued Notice 2020-01 which provides relief to employers on timely providing any notices required under ERISA as long as the employer provides notice in good faith as soon as administratively practicable under the circumstances. Good faith disclosure includes use of electronic alternative means of communicating with plan participants and beneficiaries who the employer reasonably believes have effective access to electronic means of communication, including email, text messages, and continuous access websites.
Employers that use a COBRA vendor may engage the vendor to send updated election notices and to communicate extended timeframes to make payments. Employers that administer their own COBRA or those that wish to keep COBRA administration costs at a minimum, may choose to develop their own general communication addressing the impact of the Outbreak Period on plan COBRA deadlines for distribution to plan participants. Both approaches should be seen as reasonable under the relief provided by the DOL in Notice 2020-1.
Please contact your HORAN Account Manager or Client Specialist with additional questions.