COBRA/HIPAA Outbreak Guidance – An Answer (Finally)

On the last possible workday on which to provide needed guidance before health plan sponsors had to fend for themselves on when the COBRA and HIPAA Outbreak Periods ended, the Employee Benefits Security Administration, part of the US Department of Labor, issued Disaster Relief Notice 2021-01.

The Outbreak Period was initially instituted effective March 1, 2020 to “pause” COBRA and HIPAA Special Enrollment Period timelines, including election, initial payment, and grace period deadlines, as well as certain claims and appeals deadlines, from that date until the COVID-19 pandemic National Emergency Declaration was lifted plus 60 days. However, under both ERISA and the National Emergencies Act, a National Emergency cannot last more than one year unless extended 90 days prior to the end of the one year period by the President in a letter to Congress and the publication of that end in the Federal Register. Former President Trump did not do so in December, so technically the National Emergency would end on February 28, 2021.

In our prior musings earlier in February, we outlined four possible approaches the DOL—in conjunction with the IRS and HHS—could go on terminating or extending the COVID-19 pandemic Outbreak Period instituted effective March 1, 2020. Of the four options, they chose the most employee-friendly, and the most difficult administratively.

Effectively, the guidance says that all of the “pause” buttons are on an individual-by-individual rolling basis. Thus for example, an employee who terminated prior to March 1, 2020 but whose COBRA 60-day election timeline had already begun to run but not yet expired, the timeline suspensions will end on February 28, 2021. For an employee whose timelines would have started running after March 1, 2020 but-for the suspended timelines, those timelines will continue to be “paused” for up to one year from the date they would have started, or 60 days after the President declares an end to the pandemic’s National Emergency, whichever occurs first.

FSA and HRA Claims Deadlines Also Extended

The guidance also extends health care Flexible Spending Account (FSA) and Health Reimbursement Arrangement (HRA) plan deadlines. For example, a 2019 calendar year plan with a 90-day runoff period that ended on March 31, 2020—a date that falls within the Outbreak Period—has that runoff date extended to March 31, 2021 for any eligible claim incurred during 2019.

As Bette Davis says in the classic movie All About Eve, “Fasten Your Seatbelts. It’s going to be a bumpy night.”