Agencies Release FAQs Confirming Impact of End of the COVID-19 Emergency Declarations on Employee Benefit Plans
Employers should prepare now for impacts to their employee benefit plans when the COVID-19 Outbreak Period expires. On March 29, 2023, in anticipation of the ends of both the National Emergency and Public Health Emergency, the Department of Labor, Health and Human Services, and the Treasury (the "Agencies") released new Frequently Asked Questions ("FAQs") to address how certain deadlines and coverage changes will function going forward. This advisory addresses the impacts on employee benefit plans and important upcoming deadlines (including unknowns in the wake of President Biden's unexpected end of the National Emergency).
Background
To review, the United States has been operating under two emergency periods since 2020: the national state of emergency ("National Emergency") originally declared by President Trump in March 2020, and a national public health emergency ("Public Health Emergency") declared by the Department of Health and Human Services ("HHS"). Under the National Emergency, certain ERISA-related deadlines were tolled during the emergency period, including deadlines for plan disclosures, HIPAA special enrollment, COBRA notices, elections, and payments, notifications for qualifying events or determinations of disability, filing benefit claims and appeals, and filing requests for external appeals. These deadlines were tolled to the earlier of 1) one year from the date an individual was first eligible for relief from the deadline or 2) 60 days after the end of the National Emergency (known as the "Outbreak Period"). See our previous in-depth advisories on the National Emergency and Outbreak Period here and here. The Public Health Emergency required health plans to cover COVID-19 diagnostic tests without imposing any cost-sharing, prior authorization, or other medical management criteria. It was expected that both emergency periods would end on May 11, 2023.
End of the Emergencies
On April 10, 2023, President Biden signed H.J. Res. 7 into law, terminating the National Emergency, effective immediately. Under a basic reading of the Outbreak Period, this means that the Outbreak Period would now end on June 9, 2023 (60 days after April 10, 2023), instead of July 10, 2023, as has been presumed. Adding to this confusion, "National Emergency" appears to be defined as both the National Emergency Concerning the Novel Coronavirus Disease (COVID–19) Outbreak and the separate determination, under section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act. H.J. Res. 7 provides: "pursuant to section 202 of the National Emergencies Act (50 U.S.C. 1622), the national emergency declared by the finding of the President on March 13, 2020, in Proclamation 9994 (85 Fed. Reg. 15337) is hereby terminated." Proclamation 9994 did not include the Stafford Act emergency, which was issued in a separate letter. The Stafford Act emergency is still set to end May 11, 2023. Over the past week, there have also been reports the Department of Labor ("DOL") informally commented that it may maintain July 10, 2023, as the end of the Outbreak Period.
It is not clear whether the Agencies will issue any additional formal written guidance to address these interpretations. The Public Health Emergency remains in effect and is expected to end on May 11, 2023.
The FAQs
The FAQs provide examples of how the end of the Outbreak Period will apply to employee benefit plans and address the impact of the end of the Public Health Emergency on group health plans. Because the FAQs pre-date the early end to the National Emergency, the FAQs assume the Outbreak Period will end on July 10, 2023. The key points of the FAQs include:
- Extended Deadlines Come to an End
The FAQs provide several examples illustrating how tolled deadlines for employee benefit plans are impacted (for a full list of examples, please review FAQ Q5):
COBRA Example: Individual A works for Employer X and participates in Employer X's group health plan. Individual A experiences a COBRA qualifying event and loses coverage on April 1, 2023. Individual A is provided a COBRA election notice on May 1, 2023. The last day for Individual A to elect COBRA is September 8, 2023 (60 days after July 10, 2023).
Special Enrollment Example: Individual C works for Employer Z. Individual C is eligible to participate in Employer Z's group health plan but previously declined participation. Individual C gave birth on April 1, 2023, and wants to enroll herself and her child in Employer Z's plan. Individual C and her child qualify for special enrollment in the plan as of April 1, 2023. Individual C can exercise her special enrollment rights for her and her child until August 9, 2023 (30 days after July 10, 2023).
As noted above, the examples used in the FAQs may be subject to updated guidance from the Agencies if the Outbreak Period ends before July 10, 2023.
- Special Enrollment for Loss of Medicaid/CHIP Coverage
The FAQs remind employers that employees will have 60 days after the end of the Outbreak Period to enroll in the employer's group health plan if they lose eligibility for Medicaid or CHIP coverage. Employers may see a large number of special enrollees because Medicaid agencies generally have been unable to terminate any Medicaid beneficiaries who enrolled on or after March 18, 2020. After March 31, 2023, Medicaid agencies will resume normal practices and many current Medicaid enrollees will lose coverage. These individuals will be able to special enroll into group health plans if 1) they are otherwise eligible, 2) they or their dependents were enrolled in Medicaid or CHIP, and 3) their Medicaid or CHIP coverage was terminated as a result of loss of eligibility for these programs.
- COVID-19 Diagnostic Testing No Longer Required to be Covered Without Cost-Sharing
Although plans and issuers can freely impose cost-sharing, prior authorization and other medical management criteria following the end of the Public Health Emergency, the Agencies "encourage" plans and issuers to continue to provide such coverage as well as telehealth and remote care services without imposing cost sharing or medical management. The FAQs state plans and issuers should look to the earliest date that such diagnostic services were rendered when determining coverage. If a test or service began before the end of the Public Health Emergency and involves multiple steps that carry over to a date after the end of the Public Health Emergency, the plan or issuer should treat all such steps or services as occurring during the Public Health Emergency and cover them accordingly.
- Plans and Issuers Must Update SBCs for Material Modifications Unless Prior Notice Was Provided This Plan Year
If a Plan Sponsor's current summary of benefits coverage ("SBC") provides that all COVID-19 tests and services are fully covered both in and out-of-network but does not specify that such coverage is only available subject to the end of the Public Health Emergency, then the SBC must be reissued with 60-days' advance notice before the change becomes effective. However, if in the current plan year, the plan or issuer notified (through the current SBC or otherwise) participants and other enrollees that the FFCRA and CARES Act diagnostic testing coverages would only be available until the end of the Public Health Emergency, they are exempt from this notice requirement. Notices and SBCs indicating limitations provided in prior plan years will not suffice.
- Plans, Providers, and Issuers No Longer Have to Post Cash Price of COVID-19 Diagnostic Tests
The CARES Act has required COVID-19 diagnostic test providers to publicly post the cash price of a COVID-19 diagnostic test on their website. This posting requirement will no longer apply once the Public Health Emergency ends.
- Out-of-Network Cost-Sharing for Preventive Services and Vaccines for COVID-19 No Longer Required
The CARES Act has required non-grandfathered group health plans and issuers to cover items, services, or vaccines intended to prevent or mitigate COVID-19 with no cost-sharing, even if out-of-network. After the end of the Public Health Emergency, plans and issuers will still be required to cover these items, services, and vaccines with no cost-sharing if in-network, but they do not have to cover without cost-sharing if out-of-network.
- Individuals Covered by a HDHP Can Continue to Receive Medical Care and Purchase Items Related to Testing and Treatment for COVID-19 Without Satisfying Deductible
The Agencies clarified that the protections under IRS Notice 2020-15 will continue after May 11, 2023. IRS Notice 2020-15 provides that a HDHP (high deductible health plan) will not fail to be a HDHP under Code Section 223(c)(2)(A) or affect HSA eligibility merely because the plan covers pre-deductible COVID-19 treatment and testing. The Agencies state that such treatment for HDHPs will continue until further guidance from the IRS is issued. Further, any future modifications will apply on a plan-year basis so that HDHPs will not be required to make mid-year changes.