Unwinding of COVID-19 plan deadline relief: New federal guidance and a potential earlier end?

The clock is ticking on pandemic-era regulations. And I’m paying close attention to the recently released Federal guidance so I can help you stay updated on the unwinding of the COVID-19 emergency measures. In this follow-up to my earlier blog post, I’ll run through what we know now—and what we’re still waiting to discover.

As the COVID-19 pandemic moves to the rear-view mirror, I’ll outline what employers, plan sponsors, and benefits advisors need to know and how to prepare. Back in February, it looked like the National Emergency would end May 11, 2023 and, with it, begin the end of the Outbreak Period. But now, with the Senate passage of a new resolution, it’s possible the national emergency might end even sooner. As we wait to see when President Biden signs the legislation, read on to find out what the new guidance means and what you should keep top of mind.

Register for our upcoming webinar

This topic is important and contains a lot of moving pieces. That’s why on April 27, I’m presenting with Ryan McArton, VP of Compliance, on Everything old is new again: How to navigate the end of COVID-19 benefits regulations. Registration is free and we’ll reserve time to answer questions.

New guidance on the end of the Public Health Emergency

On March 29, 2023, the Department of Labor (DOL) Employee Benefits Security Administration (EBSA) – in conjunction with the Departments of Health and Human Services and the Treasury (collectively, the “Agencies”) released new guidance in the form of Frequently Asked Questions (FAQs)¹. The guidance addresses how the end of the Public Health Emergency (PHE)—set to expire May 11, 2023—impacts requirements to cover COVID-19 diagnostic testing and vaccines. It also describes how the anticipated end of the National Emergency affects the temporary extension of certain ERISA health and welfare plan benefit deadlines that fall within the COVID-19 “Outbreak Period.”

A wait-and-see on the expiration date

It so happens that on the same date the Agencies published the new guidance, the U.S. Senate passed H.J. Res. 7², a Republican-led joint resolution proclaiming that the National Emergencies Act declaration issued by President Trump on March 13, 2020, is “hereby terminated.” While President Biden seems likely to sign this into law, it’s not yet clear when this legislation will be enacted. If this is indeed signed into law, the 60-day period constituting the end of the Outbreak Period will likely begin earlier than anticipated (or contemplated in the FAQs).

Background on the Public Health Emergency and why timing matters

To review, on January 31, 2020, Health and Human Services (HHS) Secretary Alex Azar II declared a “Public Health Emergency” retroactive to January 27, 2020, for the entire United States due to the COVID-19 pandemic. Generally, such declarations last for 90 days or until HHS declares that the emergency no longer exists (whichever comes first). HHS may extend the emergency health declaration for additional 90-day periods if the public health emergency continues to exist, which it has done repeatedly.

During the PHE, group health plans are required to cover the cost of COVID-19 tests and testing-related services without cost-sharing or prior authorization or other medical management requirements. Effective January 15, 2022³, this was expanded to include over-the-counter (OTC) home COVID-19 tests.

Because current HHS Secretary Xavier Becerra most recently⁴ renewed the PHE effective January 11, 2023, this period was slated to expire April 11, 2023. With the White House’s declaration that this period will be renewed again and then terminate it May 11, 2023 (prior to the end of the 90-day period), employer plans will no longer be required to cover such tests and services with no cost sharing after May 11, 2023, though the FAQ states that plans and issuers “are encouraged to continue to provide this coverage, without imposing cost sharing or medical management requirements, after the PHE ends.”

It’s important to note: the Public Health Emergency is not tied to the National Emergency; H.J. Res. 7 does not impact the scheduled end of the Public Health Emergency period.

A quick review of the National Emergency

The National Emergency began in March 2020 under President Donald Trump, who issued an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act in response to the COVID-19 outbreak. In this declaration, President Trump declared the COVID-19 pandemic to be a “National Emergency” period effective March 1, 2020, for a period of up to one year. This period was later clarified – through subsequent guidance from the Agencies – to mean the period between March 1, 2020, and the earlier of (a) 60 days after the announced end of the national emergency due to COVID-19 (which is set by the President), or (b) one year from the plan or individual’s original deadline date (which will vary by individual occurrence).⁵

These extensions were applied to all group health plans, disability and other employee welfare benefit plans and employee pension benefit plans subject to the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code. However, the “Notice of Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak” affirmed that HHS “concurs” with the relief. Moreover, HHS would essentially adopt a non-enforcement policy to extend similar timeframes to non-federal governmental group health plans and health insurance issuers offering coverage in connection with a group health plan.

Once this Outbreak Period ends (i.e., July 10, 2023, absent any further changes, or earlier if/when President Biden signs legislation terminating the National Emergency prior to May 11, 2023)⁶, these suspended timeframes will begin to run again at pre-pandemic rates:

• The 14-day deadline for plan administrators to provide COBRA election notices to qualified beneficiaries;

• The 30-day period (or 60-day period, in some cases) to exercise HIPAA special enrollment rights in a group health plan following birth, adoption, or placement for adoption of a child; marriage, loss of other health coverage; or eligibility for a state premium assistance subsidy;

• The 60-day deadline by which a participant or qualified beneficiary must provide notice of divorce or legal separation, a dependent child that ceases to be an eligible dependent under the terms of the plan), or a Social Security disability determination used to extend COBRA coverage;

• The 60-day deadline in which to elect COBRA coverage;

• The date by which monthly COBRA premium payments are due; and

• The deadline under the plan by which participants may file a benefit claim (under the terms of the plan) and the deadlines for appealing an adverse benefit determination or requesting an external review, including Healthcare Flexible Spending Accounts (Health FSAs) and Health Reimbursement Arrangements (HRAs).

o Note: these extensions do not apply to expense reimbursement requests under a non-group health plan such as a Dependent Care FSA nor does this relief apply to Health Savings Accounts (HSAs).

In addition, the relief guidance suspended the deadline for the plan administrator to provide the COBRA election notice (that is, the 14-day deadline [44 days where the employer is the plan administrator]) to qualified beneficiaries.

Health Savings Account (HSA)-Compatible High Deductible Health Plans (HDHPs) and COVID-19 Testing and Treatment

On March 11, 2020, the Internal Revenue Service (IRS), in response to the PHE, published IRS Notice 2020-15⁷ allowing HDHPs to provide benefits associated with testing for and treatment of COVID-19 either without a deductible or with one that is below the otherwise required minimum annual deductible; therefore, an HDHP that provided such care on a no- or low-cost basis would not fail to qualify as an HDHP. As a result, employees’ eligibility to make contributions to their HSAs would not be jeopardized, even if medical expenses related to COVID-19 testing or treatment were paid by the HDHP. Notice 2020-15 also provided that this relief would continue until further guidance is issued.

The FAQs (see Q&A 8) confirmed that no further guidance regarding the treatment of an HDHP providing COVID-19 testing or treatment prior to the satisfaction of the applicable minimum deductible has been issued. Therefore, the FAQs further affirmed that an HDHP can continue to provide such treatment and testing on a pre-deductible basis without affecting an employee’s eligibility to make contributions to an HSA until further guidance is issued.

If an employer decides to continue covering testing at no cost, they should consider how this affects any employer sponsored HDHP. IRS Notice 2020-15 permitted HDHP coverage of COVID-19 testing with no cost-sharing without conflicting with HSA eligibility, we believe this relief continues until further guidance is issued.

The Department of the Treasury and the IRS are reviewing the “appropriateness” of continuing this relief once the PHE and national emergency periods end and anticipate issuing additional guidance in the near future. Any such guidance that modifies the Notice 2020-15 relief will not generally require HDHPs to make changes in the middle of a plan year in order for covered individuals to remain eligible to contribute to an HSA.

Again, it’s worth noting that H.J. Res. 7 does not impact relief tied to the PHE.

Impact of the Expiration of the Emergency Periods, Clarified

As we previously reported, the Outbreak Period is – absent further changes - expected to end on July 10, 2023, which is 60 days following the currently announced end of the COVID-19 National Emergency anticipated on May 11, 2023. The Agencies confirmed this date of reckoning in this set of FAQs (see Q&A 5), and also affirmed that nothing within the Internal Revenue Code or ERISA prohibits a group health plan from allowing longer periods than those described above for employees, participants, or beneficiaries from completing these actions. In fact, the Agencies “encourage” group health plans to consider extending these periods to potentially minimize impact to participants and beneficiaries.

This Q&A is, perhaps, most noteworthy given the possibility of President Biden ending the National Emergency prior to the announced May 11, 2023, date should he indeed enact legislation in response to H.J. Res. 7. However, insured plans (or self-insured plans with stop-loss coverage) considering any extension of these periods beyond the actual end of the Outbreak Period should discuss these options in advance with the applicable carrier(s) to ensure coverage is extended appropriately.

The FAQ document provides a number of situational examples intended to clarify how the requirements under the emergency relief notices related to disregarded periods for individual actions will change after the COVID-19 National Emergency ends.

These FAQs affirm our previously provided examples and – notably – clarify that a plan can require a qualified beneficiary to pay an initial premium payment sufficient to cover the cost of COBRA coverage from the time the qualified beneficiary’s coverage under the group health plan would have otherwise terminated through the end of the month before the month in which the initial premium payment is made.

Initial Premium Payment Example⁸: If a qualified beneficiary has a qualifying event and is provided a COBRA election notice on June 1, 2022; and makes their election on December 1, 2022, retroactive to June 1, 2022. The qualified beneficiary has 45 days from July 10, 2023 (i.e., August 24, 2023) to make the initial COBRA premium payment. The initial COBRA premium payment would need to cover the monthly premium payments for the June 2022 through July 2023 coverage periods; the premium payment for the August 2023 coverage period must be made by August 31, 2023 (i.e., 30 days following the August 1, 2023, due date for that coverage period).

Subsequent monthly premium payments must be made on the first of each month, subject to a 30-day grace period following those coverage periods’ respective due dates.

Prepare now for future changes

As we approach the announced end of the Outbreak Period, plan administrators and impacted qualified beneficiaries and participants who have yet to elect COBRA coverage, or who have elected but have not paid premiums, should consider carefully any claims that may have been incurred during the Outbreak Period versus the required COBRA premiums and ensure that any elections and premium payments are timely made, especially in light of the FAQs affirming that the initial COBRA premium can be required to include payment for all retroactive coverage periods. In addition, individuals covered by an HDHP may continue to make tax-favored contributions to an HSA in the event of COVID-19 testing or treatment for the time being.

HealthEquity will continue to monitor agency guidance on this matter and provide updates accordingly. As always, we strongly encourage employers and plan sponsors to consult competent legal or benefits counsel for all guidance on how the actions apply in their circumstances.

PS: Remember to sign up for the webinar.