Covid Outbreak Periods Set to End July 10th

With the Outbreak Period set to end on July 10, 2023, OCA wanted to provide a clear overview of the impact this has on certain COBRA and benefit notice and payment deadlines.

The Outbreak Period…History & Background

In response to the COVID-19 outbreak, the Employee Benefits Security Administration and the IRS issued guidance that suspended the time periods until the earlier of (i) one year from the date the time period would have otherwise begun or 60 days after the end of the National Emergency or such other date announced by the Agencies (the “Outbreak Period”). The Outbreak Period applied to time periods following certain events, such as the COBRA Election Notice, COBRA Qualifying Event Notice, COBRA Premium Payments, and more.

The Outbreak Period…Present Day 

On March 29, 2023, the Agencies issued FAQs Part 58 in which they announced that the end of the national emergency for purposes of the Outbreak Period is May 11, 2023, which means that the outbreak period will end July 10, 2023 (60 days after May 11, 2023).*1   

Bottom Line: Health plans will stop disregarding the Outbreak Period from the applicable ERISA, COBRA, and HIPAA timeline calculations as of July 10, 2023. 

Below are examples showing the application of the Outbreak Period to COBRA events and benefit claim filing.

NOTE: If an event occurred on or before July 10, 2022, the 1 year limitation will apply earlier than July 10, 2023. See below for an example.

COBRA Election Period Example:

The Outbreak period rules extend the 60-day COBRA election period by disregarding the Outbreak Period. Under COBRA, employees and dependents who lose active coverage as a result of a qualifying event (e.g., termination of employment, reduction of hours) have 60 days to elect continuation coverage on the date the COBRA election notice is provided.

Example

• Employee’s hours are reduced causing the employee to lose active coverage under the health plan, which is a COBRA qualifying event.
• The COBRA notice is furnished to employee on April 1, 2023.

Result

• The standard 60-day COBRA election period is suspended due to the Outbreak Period.
• The Outbreak Period ends July 10, 2023.
• The employee has 60 days after the end of the Outbreak Period (until September 8, 2023) to elect COBRA.

COBRA Election Example #2 (application of the 1 year rule):
Example

• Employee terminates employment. 
• The COBRA notice is furnished May 11, 2022. 

Result

• The standard 60 day election period is suspended during the outbreak period.
• In this case, the Outbreak Period with respect to this event ends May 10, 2023 – 1 year from the date the 60-day election period would have otherwise begun.
• The former employee must elect COBRA by July 10, 2023.

COBRA Premium Example:

Example

• A qualified beneficiary elects COBRA on October 15, 2022, retroactive to October 1, 2022. 
• The 45 day period to pay the 1^st premium is suspended until July 10, 2023 (the end of the Outbreak Period).

Result

• The first premium is due August 24, 2023 (45 days after the end of the Outbreak Period) The initial COBRA premium payment would include the monthly premium payments for October 2022 through July 2023. 
• The premium payment for August 2023 must be paid by August 31, 2023 (the last day of the 30-day grace period for the August 2023 premium payments.  Subsequent monthly COBRA premium payments would be due the first of each month, subject to a 30-day grace period.

ERISA Plan’s Benefit Claim Filing Deadline Example:

The Outbreak Period suspends the time for filing benefit claims under an ERISA plan’s claims procedures. Note: the Outbreak Period applies to the health FSA run-out period (ERISA plan) but not the dependent care FSA run-out period (non-ERISA plan). 

Example 

• Employee was enrolled in the health FSA for the 2022 calendar plan year, which by its terms requires that benefit claims be filed during a run out period beginning January 1, 2023 and ending March 31, 2023, –i.e. 90 days of the end of the plan year. 

 Result 

• The health FSA’s 90-day run-out period is suspended during the Outbreak Period. 
• The Outbreak Period ends July 10, 2023. The 90 day period for filing claims for the 2022 plan year begins July 11, 2023 and ends October 8, 2023 (90 days after the end of the Outbreak Period). 

[1] On April 10, 2023, President Biden signed H.R. Joint Res. 7 (HR 7), which ended the national emergency declared under the National Emergencies Act.  The Agencies have informally indicated that HR 7 has no impact on the end of the national emergency for purposes of the Outbreak Period.  We note also that our counsel has indicated that the Outbreak Period is a product of authority granted to the Agencies in accordance with ERISA 518, which is tied directly to the national emergency declaration under the Stafford Act.  HR 7 did not end the national emergency under the Stafford Act.