Essential guidance for post-hurricane disasters

The recent devastation caused by Hurricanes Helene and Milton has left many individuals facing severe damage to their homes. And companies are also recovering from damage to properties and disruptions to their businesses. These natural disasters present challenges to employers and workers alike, including the ability to meet required deadlines from employer-sponsored retirement and health plans, to name a few.

Relief provides flexibility and additional time for employee benefit plans

Recovering from disasters like these takes a significant amount of resources and time. That’s why the Department of Labor (DOL), alongside the Department of the Treasury and the Internal Revenue Service (IRS) – for clarity, I’ll refer to them collectively as the “Agencies” – have issued crucial guidance to support those affected by these natural disasters.

Keep reading for my summary of the newly announced compliance measures. My goal is to help employers, plan sponsors, and benefits advisors effectively manage employee benefit plans in the wake of these devastating natural disasters. In fact, I recently wrote about this subject here.

Please note, this general summary is intended to educate employers and plan sponsors on the potential effects of government guidance on employee benefit plans. It is not and should not be construed as legal or tax advice. As always, HealthEquity strongly encourages employers and plan sponsors to consult competent legal or benefits counsel for all guidance on how the actions apply in their specific circumstances.

Understanding the post-disaster compliance guidance

On November 7, 2024, the DOL Employee Benefits Security Administration (EBSA) issued Disaster Relief Notice 2024-01 to announce compliance guidance and further relief for employee benefit plans, qualified beneficiaries, and other plan members impacted by Hurricanes Helene and Milton.¹

The Agencies² jointly released guidance to give individuals impacted by these disasters extended deadlines to enroll in group health plan coverage through HIPAA special enrollment rights, to elect and pay for COBRA continuation coverage, to provide notification to the group health plan of a qualifying event or a Social Security disability determination, and to submit claims for coverage and file appeals for adverse benefit determinations.

The Agencies also provided guidance allowing additional time in which group health plans subject to ERISA or the Internal Revenue Code (the “Code”), and their sponsors and administrators affected³ by Hurricane Helene, Tropical Storm Helene, or Hurricane Milton, can provide COBRA Election Notices under ERISA § 606(c) and Code § 4980B(f)(6)(D).

What the guidance means for people in the impacted areas

The guidance above means those employers affected by storms Helene and Milton get additional time to send COBRA election notices.

Specifically, the guidance provides that such group health plans, disability and other employee welfare benefit plans, and employee pension benefit plans subject to ERISA or the Code must disregard the applicable “Relief Period” (see below) for plan participants, beneficiaries, qualified beneficiaries, or claimants located in Florida, Georgia, North Carolina, South Carolina, Tennessee, and Virginia with respect to certain plan deadlines.

For example, if a person with COBRA coverage living in Appling County, Georgia, had already chosen COBRA before Hurricane Helene and paid their premiums on time through September 2024, they normally would need to pay their October 2024 COBRA premium by the first of each month, with a grace period of 30 days (or October 31, 2024). However, because of this special relief, the individual can pay their premiums for October 2024 to May 2025 as late as May 31, 2025, and still be covered. If they only pay for October and November 2024 by May 31, 2025, they will be covered for those two months. Any medical services from November 30, 2024, onward will be considered for payment under their health plan.

Said another way, this means that the impacted deadlines (see “Key Extensions for Individuals Affected by Hurricanes Helene and Milton” described below) cannot be enforced until May 1, 2025.

What are the relief periods?

The relief period beginning and end dates for specific areas designated by the Federal Emergency Management Agency (FEMA) as eligible for Individual Assistance because of Hurricane Helene, Tropical Storm Helene, and Hurricane Milton are as follows:

• Designated Florida areas for Hurricane Helene⁴: September 23, 2024 - May 1, 2025.

• Designated Georgia areas⁵: September 24, 2024 - May 1, 2025.

• Designated areas in North Carolina⁶, South Carolina⁷, and Virginia⁸: September 25, 2024 - May 1, 2025.

• Designated Tennessee areas⁹: September 26, 2024 - May 1, 2025.

• Designated Florida areas for Hurricane Milton¹⁰: October 5, 2024 - May 1, 2025.

Key extensions for individuals affected by Hurricanes Helene and Milton

The guidance offers several critical timeline extensions for affected individuals, including:

• Special enrollment rights under HIPAA.

• Election periods for COBRA coverage.

• Deadlines for COBRA premium payments.

• Notifications for qualifying events or Social Security disability determinations.

• Filing claims and appeals for benefits.

Specifically, the guidance includes:

• The 30-day period to exercise special enrollment rights under HIPAA (or the 60-day period, in the case of the special enrollment rights added by the Children’s Health Insurance Program Reauthorization Act of 2009) for major medical plans and other non-excepted benefits (e.g., following the addition of a spouse through marriage or the addition of a child through birth, adoption, or placement for adoption);

• The 60-day election period for electing COBRA coverage;

• The date by which COBRA premium payments must be made;

• The date by which an individual must notify the plan of a qualifying event (e.g., a divorce or legal separation) or a Social Security disability determination;

• The date by which members may file claims for benefits under the plan’s generally applicable claims procedures (essentially extending the run-out period for reimbursement by health plans, health Flexible Spending Accounts (health FSA) or Health Reimbursement Arrangements until the end of the applicable Relief Period); and

• The date by which claimants may file an appeal of adverse benefits determinations or request external review after receipt of an adverse benefit determination or a final internal adverse benefit determination.

FAQs for guidance clarification

This guidance includes several helpful examples to illustrate the application of this timeline extension with respect to the plan deadlines listed above. It is noteworthy, however, that this relief does not seem to allow changes or revocations to cafeteria plan salary reductions (e.g., an election of pre-tax contributions under a health FSA).

The DOL also published guidance in the form of Frequently Asked Questions¹¹ for plan participants and beneficiaries to address many of the concerns of those affected by Hurricanes Helene and Milton. These FAQs include options available to those who have – or may soon – lose their employment-based health coverage because of a weather-related disaster (e.g., special enrollment under a spouse’s employer health plan, COBRA continuation coverage, enrollment in a Health Insurance Marketplace plan), what to do if an employer’s place of business is temporarily closed because of a weather-related disaster, whom to contact to file a claim for retirement benefits, and clarification of notification timeline relief.

Current guidance does not impose specific notice requirements (e.g., furnishing a dedicated notice to plan participants advising of timeline extensions). It is recognized that there are many logistical considerations and ambiguities with respect to good-faith application of this guidance.

More ways to support employees through an Employee Care and Disaster Relief Account

In times of crisis, ensuring employee safety and wellbeing is paramount. That’s why HealthEquity can provide additional support through Employee Care and Disaster Relief Accounts (ECDRAs).¹²

Disaster Relief Notice 2024-01 covers the major disasters declared by President Biden under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (“the Stafford Act”) with respect to Hurricane Helene (including Tropical Storm Helene) and Hurricane Milton. The Stafford Act allows employers to provide tax-free funds to employees for qualified disaster-related expenses.

An ECDRA can provide financial relief for disaster-related expenses, offering crucial support to employees during difficult times. From temporary housing to medical care, the ECDRA is a seamless, tax-free solution that helps alleviate financial burdens.

Looking ahead

The Agencies will continue to monitor the impact of the weather-related disasters and may provide additional relief “as warranted”. HealthEquity will also watch this topic and, as additional guidance is available, we will inform you accordingly.