Benefits Bryan Cave

Benefits BCLP

Health Plans

Main Content

Are Your COBRA Notices Sufficient to Avert a Costly Challenge?

While the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) continuation coverage subsidy requirements imposed by the American Rescue Plan Act of 2021 (previously discussed here and here) are at the forefront of employers’ minds, recent litigation trends should motivate plan sponsors to review their standard COBRA election notices to ensure they comply with the general requirements in the regulations promulgated by the Department of Labor (“DOL”).

The regulations[1] require COBRA notices be written in a manner calculated to be understood by the average plan participant. Required information includes:

  • The name and plan under which continuation coverage is available;
  • The name, address, and phone number of the plan administrator;
  • Identification of the qualifying event;
  • Identification of the qualified beneficiaries (by status or name) who are recognized by the plan as being entitled to elect continuation coverage due to the qualifying event;
  • An explanation of the procedures for electing coverage, and the consequences of failing to elect coverage;
  • A description of the coverage available;
  • The time period for which the coverage is available; and
  • The cost of coverage and due dates for payments.

A spate of recent litigation reminds us that failure to include required information in COBRA election notices may expose the plan sponsor and the plan administrator to claims from participants and beneficiaries. Further, if the information included in COBRA election notices is likely to confuse participants and beneficiaries, there may be potential liability for failure to provide a

DOL Flies Alone: Guidance on the 100% COBRA Subsidy under the American Rescue Plan Act of 2021

The American Rescue Plan Act of 2021 (“ARPA”) provides that, for the period from April 1, 2021 until September 30, 2021, if an individual’s Consolidated Omnibus Budget Reconciliation Act (“COBRA”) qualifying event is an involuntary termination of employment or a reduction of hours (each, an “Assistance Eligible Individual”), then 100% of the COBRA premium is paid by the employer, health plan, or insurer and the premium expense is reimbursed by the federal government through a refundable FICA tax credit. We previously summarized the COBRA subsidy provisions under ARPA in a blog post, available by clicking here.

Guidance Provided:  As expected, additional guidance implementing the COBRA subsidy was issued by the Department of Labor (“DOL”) on April 7, 2021 (the “Guidance”). The Guidance includes:

Show Your Work: FAQs on Non-Quantitative Treatment Limitation Comparative Analyses

Among the requirements under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (the “MHPAEA”) group health plans and health insurance issuers must apply any processes, strategies, evidentiary standards or other factors underlying non-quantitative treatment limitations (“NQTLs”) to mental health or substance use disorder (“MH/SUD”) benefits comparably and no more stringently than to medical/surgical benefits.

The Consolidated Appropriations Act, 2021 (“CAA”) included provisions designed to enhance transparency with respect to compliance with the MHPAEA, including a requirement that group health plans and health insurance issuers perform and document comprehensive NQTL comparability analyses. We previously summarized the CAA’s requirements in our Q1 2021 Newsletter, available by clicking here.

On April 2, 2021, the Department of Labor (“DOL”) issued answers to frequently asked questions (“FAQs”) prepared jointly with Treasury and the Department of Health and Human Services (collectively, the “Departments”) concerning the CAA’s requirements. The key takeaways from the FAQs include:

  • No Delay in Compliance. The Departments are not providing a delay in the compliance requirements under the CAA and stated that group health plans and health insurance issuers should now be prepared to make their NQTL comparative analyses available upon request by the Departments or a state authority.
  • Comparative Analyses Must Include Detailed Supporting Evidence and Discussion. The Departments will not consider a NQTL comparative analysis which includes only general, conclusory statements regarding compliance to meet the requirements of the MHPAEA and CAA. Instead, detailed written

100% COBRA Subsidy from April 1, 2021 Until September 30, 2021

The American Rescue Plan Act of 2021 (“ARPA”) provides that, for the period from April 1, 2021 until September 30, 2021, if an individual’s Consolidated Omnibus Budget Reconciliation Act (“COBRA”) qualifying event is an involuntary termination of employment or a reduction of hours (each, an “assistance eligible individual”), then 100% of the COBRA premium is paid by the employer, health plan, or insurer and the premium expense is reimbursed by the federal government through a refundable FICA tax credit.  For an insured or self-insured plan, the employer applies for the tax credit; however, a multiemployer plan will apply direct for the tax credit.

The subsidy is available for both assistance eligible individuals as well as their dependents electing COBRA, but is not available for anyone who voluntarily ends their employment.  The subsidy will end on the earliest of (1) the expiration of the assistance eligible individual’s maximum 18-month COBRA period, (2) the individual’s eligibility for another group health plan or Medicare, or (3) September 30, 2021 (when the temporary subsidy under ARPA ends).

The termination of employment or reduction of hours may have occurred prior to the effective date of ARPA.  A new 60-day election period is created for individuals who had an involuntary termination of employment or reduction in hours within the last 18 months and did not timely elect COBRA or dropped COBRA coverage.  The election period begins on the date that the individual receives the new COBRA notice.

An employer may elect to permit assistance eligible persons

Additional COVID-19 Extensions = Greater Administrative Headaches for Plan Sponsors

As any employer is keenly aware, the administration of an employee benefit plan (especially a group health plan) involves a number of different deadlines imposed under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (Code).  Amidst concerns that the current COVID-19 pandemic may cause individuals to lose benefits due to the failure to meet certain pre-established deadlines and in recognition of the challenges group health plans may face in complying with certain notice obligations, the Department of Labor and Internal Revenue Service (collectively, the “Agencies”) jointly published notice in the Federal Register of a significant extension in application of the following statutorily prescribed deadlines:

Special Enrollment Periods

  • 30-day deadline to request enrollment in the event of a loss of eligibility for other health coverage or the acquisition of a new dependent due to marriage, birth, adoption or placement for adoption
  • 60-day deadline to request enrollment in the event of either a loss of eligibility for coverage under Medicaid or a state children’s health insurance coverage (CHIP) or gaining eligibility for premium assistance through Medicaid or CHIP.

COBRA Continuation Coverage

  • 30-day period for employer to notify plan administrator of certain COBRA qualifying events
  • 14-day period for plan administrator to issue COBRA Election Notice to qualified beneficiary
  • 60-day period for qualified beneficiary to elect COBRA continuation coverage
  • 45-day period for qualified beneficiary to submit initial COBRA premium payment
  • 30-day period for qualified beneficiary to submit subsequent COBRA premium payments
  • Qualified beneficiary’s

Guidance on Employee Benefits and the Coronavirus (COVID-19)

As the Coronavirus has continued to spread, there has been guidance from various entities on a myriad of topics pertaining to employee benefits. Summaries and links to such guidance can be found below. This information will be updated regularly as more guidance becomes available.

The Health Insurance Portability and Accountability Act (HIPAA): The Office for Civil Rights, a division of the U.S. Department of Health and Human Services, published a bulletin outlining privacy of protected health information and when covered entities may disclose such information without a patient’s authorization. Covered entities may be able to disclose needed protected health information without individual authorization to public health authorities, to persons at risk of contracting or spreading a disease, or to prevent a serious and imminent threat, among other limited circumstances. Covered entities must make reasonable efforts to limit the information disclosed to that which is the minimum necessary to accomplish the purpose. In a prior post, we provided a review of the bulletin and ongoing HIPAA obligations for covered entities.

The Family and Medical Leave Act (FMLA): The U.S. Department of Labor released a Q&A addressing various questions about employee rights and employer responsibilities under the FMLA. Eligible employees are typically entitled to take up to 12 weeks of unpaid, job-protected leave in a designated 12-month period due to their own illness or that of a family member. Covered employers must continue to abide by federal FMLA laws as well

HIPAA Continues to Apply During Coronavirus Pandemic

As the Coronavirus Disease 2019 (COVID-19) pandemic grows, employers and others may be wondering how the public health emergency created by the outbreak affects information protected under the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

The short answer: All HIPAA protections continue to apply. Accordingly, employer-sponsored health plans, which are “covered entities” subject to HIPAA, must continue to adhere to HIPAA’s privacy and security rules and may not use or disclosure protected health information (PHI) in a manner not already provided for under HIPAA in the absence of an applicable exception issued by the U.S. Department of Health and Human Services. As a reminder, PHI that an employee obtains when carrying out an administrative function for the plan generally cannot be shared with the employer.  For example, if in the process of performing auditing activities for the employer-sponsored health plan, an employee learns that the plan has provided coverage for the COVID-19 treatment for an employee’s child, that information is PHI and the employee is prohibited from sharing that information with the employer.

The U.S. Department of Health and Human Services Office for Civil Rights recently issued a Bulletin to remind covered entities of their continuing compliance requirements and the circumstances under which PHI may be disclosed without an individual’s authorization, including:

  • Treatment, when necessary to treat the patient or a different patient by one or more health care providers.
  • Public health activities, including disclosure to a public health authority such as the

IRS Relief for HDHPs Covering COVID-19 Testing and Treatment Costs

Yesterday, the Internal Revenue Service (IRS) issued Notice 2020-15 announcing that a high deductible health plan’s payment of COVID-19 (coronavirus) testing and treatment prior to satisfaction of the plan’s minimum deductible will not affect its status as a high deductible health plan.

Pursuant to Section 223(c)(2) of the Internal Revenue Code, high deductible health plans generally must require covered individuals to satisfy minimum deductibles before the plan can pay for any medical care services and items (subject to certain limited exceptions such as preventive care) in order for the covered individuals to remain “eligible individuals” for health savings account (HSA) purposes.   Under the relief provided in Notice 2020-15, this minimum deductible requirement will not apply to:

  • Medical care services and items related to testing for and treatment of COVID-19. These services and items may, therefore, be provided without a deductible or with a deductible that is less than the otherwise applicable minimum deductible.  For 2020, the minimum deductibles are $1,400 for self-only coverage and $2,800 for family coverage.
  • Any COVID-19 vaccine developed in the coming months. The IRS included a reminder that vaccines will continue to be treated as preventive care to which the minimum deductible requirement does not apply.

This is welcome news for employers sponsoring high deductible health plans who have been exploring ways in which to help alleviate the financial obstacles that may prevent employees from getting tested or seeking treatment for COVID-19 as well as for individuals with fully-insured

Deep Dive: DOL Appeals Federal Court’s Association Health Plan Ruling and Issues Interim Guidance

As we predicted in our last Deep Dive, the Department of Labor (DOL) has appealed the District Court for the District of Columbia’s ruling in State of New York, et al. v. United States Department of Labor, et al. which vacated key portions of the DOL’s association health plan regulation (AHP Rule). The DOL filed its Notice of Appeal with the federal district court (D.D.C.) on April 26.

In response to the Court’s ruling (and before filing its appeal) the DOL had published a Q&A-style discussion of the ruling’s impact. After filing its appeal, the DOL published an official statement (DOL Statement) outlining interim guidance for previously-formed AHPs and employers who began participating in an AHP in reliance on the AHP Rule. The DOL Statement clarifies that these employers and AHPs may continue their coverage for the time being, yet leaves key questions unanswered.   In welcome news for AHPs that sought to form under the AHP Rule, the DOL confirms its commitment to “taking all appropriate action within its legal authority to minimize undue consequences on employees and their families.”  As support, the DOL Statement reassures that:

  • Employers participating in insured AHPs formed under the AHP Rule may continue their coverage through the later of the end of the current plan year or contract term and that the Department of Health and Human Services (HHS) confirmed employers have an independent right to continue coverage through

Deep Dive: Association Health Plan Considerations following the Court Order Vacating the DOL’s Final Rule

On March 28, 2019, the Federal District Court for the District of Columbia issued an opinion and order vacating key portions of the Department of Labor’s regulation, published in June 2018, which had expanded the definition of “employer” under Section 3(5) of ERISA (the “AHP Rule”), thereby broadening the scope of association health plans (“AHPs”).  According to the Court, it is unreasonable to interpret “employer” as including working owners and groups that do not have “a true commonality of interest” and doing so leads to “absurd results” and is an “end run” around the Affordable Care Act.  The Court’s opinion was issued with immediate effect and has cast doubt on the future use of AHPs, especially self-insured AHPs.

As background, the AHP rule was promulgated in response to President Trump’s October 12, 2017, Executive Order, which directed the DOL to expand access to and allow more employers to form AHPs.  Before the Executive Order, the DOL had been characterizing AHPs maintained by a “bona fide” group or association of employers as being sponsored by a single employer (with the AHP retaining its status as a MEWA under ERISA). The AHP Rule significantly expanded such application by permitting groups or associations, including groups consisting entirely of “working owners” (self-employed individuals without common law employees), to form a single employer AHP that could qualify as a “large group” plan that would be exempt from certain Affordable Care Act reforms, such as offering the full suite of

The attorneys of Bryan Cave Leighton Paisner make this site available to you only for the educational purposes of imparting general information and a general understanding of the law. This site does not offer specific legal advice. Your use of this site does not create an attorney-client relationship between you and Bryan Cave LLP or any of its attorneys. Do not use this site as a substitute for specific legal advice from a licensed attorney. Much of the information on this site is based upon preliminary discussions in the absence of definitive advice or policy statements and therefore may change as soon as more definitive advice is available. Please review our full disclaimer.