IRS Clarifies Extension of Certain COBRA Election and Premium Payments Deadlines
On October 6, 2021, the IRS issued Notice 2021-58, clarifying the application of the extensions of timeframes related to COBRA. As a reminder, the extension of certain timeframes for employee benefit plans, participants, and beneficiaries required plans to disregard the period from March 1, 2020, until 60 days after the end of the National Emergency (known as the “Outbreak Period”) for certain deadlines, including the deadlines applicable to COBRA notices and payment. Subsequent guidance clarified that the relief is available from the earlier of a) one year from the date an individual or plan is first eligible for relief or b) the end of the outbreak period.
Notice 2021-58 clarifies that the disregarded period for an individual to elect COBRA continuation coverage and the disregarded period for the individual to make initial and subsequent COBRA premium payments generally run concurrently. This means that individuals who take advantage of the extension of certain timeframes by electing COBRA continuation coverage outside of their initial 60-day COBRA election timeframe will have one year and 105 days after the date the COBRA notices was provided to make the initial COBRA premium payment. (The 105 days represents the number of days until the first payment must be made under normal COBRA rules – an initial 60 days to make an initial COBRA election plus the 45 days to make the initial COBRA premium payment.)
Alternatively, individuals who make their COBRA election within their initial 60-day COBRA election period will have one year and 45 days to make the initial COBRA premium payment.
However, the notice also provides additional relief stating that initial COBRA premium payments will not be due before November 1, 2021, as long as the individual makes their initial COBRA premium payment within one year and 45 days after their election date. They provided this relief because some individuals might not have realized that the disregarded period to make a COBRA election and the disregarded period to make an initial COBRA premium payment run concurrently. In order to avoid inequitable outcomes, in no event will an individual be required to make the initial COBRA premium payment before November 1, 2021, even if November 1, 2021, is more than one year and 105 days after the date the election notice was received.
The notice also discusses the interaction of the extension of certain timeframes with the COBRA premium assistance provided under the American Rescue Plan Act (ARPA). Specifically, the extension of certain timeframes did not provide additional time for individuals to elect ARPA extended coverage. However, individuals will still be able to access the extension of timeframes relief to pay for any COBRA coverage that they receive after the ARPA COBRA premium assistance ends.
The notice goes on to provide a number of examples of how this guidance applies. Employers should review this notice to understand the relief it provides to individuals who will elect COBRA through the end of the outbreak period.
Notice 2021-58 »
CMS Issues FAQs Regarding COVID-19 Vaccine Premium Surcharges and Incentives
On October 4, 2021, the Departments of Health and Human Services, Treasury, and Labor (collectively, the departments) issued guidance in the form of FAQs clarifying HIPAA nondiscrimination rules applicable to certain vaccine-related wellness programs, as well as vaccine coverage. With the ongoing COVID-19 pandemic and the availability of vaccines, many employers are considering ways to incentivize their employees to get vaccinated. This recent guidance clarifies how HIPAA nondiscrimination rules impact wellness programs that offer vaccine-related premium surcharges and incentives.
In Q3 of the FAQs, the departments confirm that a group health plan is permitted to offer participants a premium discount for receiving a COVID-19 vaccination if the design of the program complies with federal wellness program rules. This includes HIPAA wellness plan rules applicable to health-contingent, activity-only wellness programs, the Americans with Disabilities Act (ADA), and other rules such as the ACA’s employer mandate affordability rules.
The HIPAA nondiscrimination rules require, among other things, that the program is reasonably designed to promote health or prevent disease, additionally:
- The reward (together with any other rewards for other health-contingent wellness programs) must not exceed 30% (or 50% for tobacco-related wellness programs) of the total cost of employee-only coverage.
- A reasonable alternative standard be available to those who show that it is unreasonably difficult to comply due to a medical condition (or medically inadvisable to satisfy the otherwise applicable standard).
- Disclosure of the reasonable alternative in all plan materials describing the wellness program.
Furthermore, HIPAA prohibits excluding COVID-19 treatment for unvaccinated participants, as doing so would constitute discrimination based on a health factor. Q4 of the FAQs clarifies that while there is an exception to the prohibition on discrimination based on a health factor for compliant wellness programs, such exception cannot be used to deny eligibility for benefits or coverage based on a health factor. The wellness plan exception applies only to premium discounts and similar cost-sharing modifications.
Further, Q5 of the FAQs explains the impact of any premium discount or surcharge related to COVID-19 vaccination status on ACA employer mandate affordability calculations. The guidance provides that since COVID-19 vaccination is not tied to tobacco use, the employer must use the higher premium amount for affordability purposes. In other words, the employer must treat all employees as if they are not vaccinated when calculating whether the offered coverage is affordable under the employer mandate.
Lastly, the guidance also confirms that plans and issuers must cover COVID-19 vaccines and their administration without cost-sharing once a vaccine is authorized under an emergency use authorization or approved under a Biologics License Application.
Employers seeking to adopt a wellness program providing incentives or surcharges related to COVID-19 vaccination status should be mindful of this guidance and consult with employment law counsel to ensure they are compliant with all applicable laws.
HHS OCR Issues FAQs Regarding HIPAA and COVID-19 Vaccinations in the Workplace
On September 30, 2021, the Department of Health and Human Services’ (HHS) Office for Civil Rights (OCR) released guidance clarifying how HIPAA applies to disclosures and requests for information regarding an individual’s COVID-19 vaccination status.
The guidance reminds the public that HIPAA privacy provisions apply only to covered entities (e.g., health plans, certain health care providers, and health care clearinghouses) and business associates. These provisions determine when covered entities and business associates are permitted to use and disclose protected health information (PHI) that covered entities and business associates create, receive, maintain, or transmit.
As such, HIPAA does not prohibit employers from asking whether employees have received a COVID-19 vaccine. In addition, HIPAA does not prevent individuals from disclosing whether they have received a COVID-19 vaccine, as HIPAA does not apply to individuals’ disclosures about their own health information. The guidance further provides that HIPAA does not prohibit an employer from requiring employees to disclose COVID-19 vaccination status as HIPAA generally does not regulate what information can be requested from employees per terms of employment. Importantly, though, other federal and state laws may require certain privacy compliance measures (e.g., requiring documentation be kept confidential).
Finally, HIPAA generally prohibits covered entities and business associates from using or disclosing an individual’s PHI, except when an individual authorizes such disclosure (or otherwise permitted by HIPAA), which can include information about whether the individual has received a COVID-19 vaccine.
This guidance serves as a reminder to employers regarding the applicability of HIPAA to certain disclosures related to COVID-19 vaccination status. Employers should be mindful that although HIPAA rules often do not apply to certain disclosures, other federal and state laws may be applicable.
Press Release »
Reminder: Medicare Part D Notice to Employees Deadline Is October 14, 2021
Employers must notify individuals who are eligible to participate in their medical plan whether the plan’s prescription drug coverage is “creditable” or “non-creditable” as compared to Medicare Part D coverage.
As a reminder, the Medicare Part D notice of creditable coverage should be distributed to employees by October 14, 2021. This notice serves to inform Medicare-eligible individuals of whether or not their employer group coverage is creditable. That information is necessary to help such individuals avoid paying higher premiums (also known as late enrollment penalties) for Medicare Part D coverage.
Employers should consult with their service providers to determine whether their coverage is creditable using either the simplified determination method or actuarial analysis. Also, keep in mind that CMS provides a model notice for employers.
Will the COVID-19 relief options for telehealth services continue to be available for the upcoming plan year?
District of Columbia
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