Nearly three years after twin emergencies were declared in March 2020, the Biden Administration has announced it will end both the COVID-19 National Emergency (NE) and the Public Health Emergency (PHE) on May 11, 2023. These emergency declarations had significant implications for employers, plan sponsors, and workers and imposed specific mandates and accommodations for delivering coronavirus care to individuals through group health benefit plans. This alert details the impact on group health plans and provides advice, tips, and tools to assist plan sponsors in identifying appropriate next steps to restore their benefits to pre-pandemic form over the next few months.
The NE and PHE (initially declared in 2020) will expire in the next four months. The Biden Administration announced that both the PHE and NE will expire on May 11.
The end of the NE brings new administrative burdens to plan sponsors as they unwind procedures put in place to suspend various participant time periods and deadlines under the outbreak period guidance initially released by federal regulators in April 2020.
The PHE expiration impacts various COVID-era accommodations and mandates, such as requiring plans to offer cost-free COVID-19 testing; however, non-grandfathered group health plans must continue to provide no-cost, in-network COVID-19 vaccinations as a preventive service under the ACA rules.
As pre-pandemic rules return, high deductible health plans (HDHPs) that offer free or low-cost COVID-19 treatments may need to evaluate those offerings, as should employers offering telehealth and employee assistance programs (EAPs) to non-plan participants as those programs (temporarily exempt from many ERISA and ACA rules) will now have to come into compliance.
The announcement should prompt plan sponsors to consider whether plan terms must be amended to return the plan to a pre-pandemic state and ensure appropriate records are retained that demonstrate compliance with COVID-era provisions in the event of federal or state audits.
Impact of the National Emergency (NE) Expiration
Let’s first tackle the presidentially declared NE and its companion “outbreak period” guidance to highlight the administrative processes and deadlines impacted by the much-anticipated end of the NE. Generally, the effect of the NE expiring will require plan administrators and participants to return to various timing rules that had been in place for nearly 40 years.
Since March 1, 2020, the NE and its companion outbreak period guidance required ERISA plans to extend certain participant action periods for up to 12 months or until 60 days after the presidential national emergency is declared ended, whichever comes first. Calculating the applicable periods requires an individual-by-individual assessment for each event subject to the rules. (See our most recent alert (opens a new window)on the outbreak period).
The “outbreak period” tolling guidance applies to COBRA deadlines, HIPAA special enrollment requests to enroll in the group health plan midyear, claims submission and appeals, and requests for a third-party review of adverse claim determinations. The end of the outbreak period means plans should revert to the pre-NE rules 60 days after the presidential national emergency ends on May 11, 2023 (presumably beginning July 10, 2023). For those that need a refresher, these timing rules will once again be as follows:
COBRA – COBRA timelines, such as election periods, premium payments, and certain participant requirements, will all return to strict deadlines. For example, COBRA-qualified beneficiaries (QBs) must, once again, make a COBRA election within 60-days of receiving the election notice and pay their first premium within 45 days, or the plan is permitted to retroactively terminate coverage back to the date of the qualifying event which may have occurred sometime in 2022. This could put a QB in a position of having to pay several months of COBRA premiums following the end of the NE to retain COBRA coverage. Also, if a QB experiences a second qualifying event such as becoming disabled, divorced, legally separated, or a child reaches the plan’s limiting age (e.g., age 26) during the COBRA duration window that remained open, they must notify the plan within 60 days after the NE ends or this option will no longer be available.
Action items: Plans that amended their COBRA election notices to include the outbreak period rules may need to amend the COBRA notices to let QBs know the extensions no longer apply. Plan sponsors should ensure internal processes and third-party vendors recalibrate the COBRA administrative processes to issue COBRA election notices within 44 days of the qualifying event (this includes the 30-day period the employer has to notify the plan administrator and 14 day period the plan has to issue the notice), limit COBRA election periods and notices of second qualifying events to 60 days, and require timely premium payments of 45 days for the initial premium and 30 days for all subsequent premiums. Plans should also resume allowing at least an additional 30-day grace period if subsequent premiums are not paid timely.
HIPAA special enrollment – Eligible plan participants that experience certain life events, including birth, adoption, placement for adoption, loss of other group health plan coverage, gaining eligibility for the state Children’s Health Insurance Program (CHIP) typically have 30 days (60 days for CHIP) to request midyear enrollment into the group health plan or switch plan options (e.g., change from HMO to PPO). See this alert (opens a new window)for detailed examples of how these requests should be handled during the outbreak period.
Action items: Plan administrators receiving late notice of these life events after the end of the outbreak period (again, 60 days after the NE ends) are no longer required to honor requests to enroll new spouses or new dependents midyear beyond the applicable 30- or 60-day timeframes. Although if they continue to honor late enrollments, premiums should be paid on a post-tax basis for the remainder of the plan year to avoid cafeteria plan concerns.
Lockton comment: Speaking of HIPAA special enrollment rights . . . Plan sponsors might soon see an influx in requests for mid-year enrollment due to the loss of Medicaid coverage. The Families First Coronavirus Response Act, passed in early 2020, increased federal Medicaid funding for states that agreed to allow anyone already enrolled or who became enrolled in Medicaid during the PHE to remain enrolled throughout the PHE, even if their eligibility status changed. This continuous coverage rule contributed to Medicaid enrollments increasing by 30%. Legislation passed late last year allows states to redetermine eligibility and begin involuntary terminations starting this month. Federal regulators estimate that more than five million people who lose Medicaid coverage will seek enrollment in employer-sponsored health plans.
Claim submission, appeals periods – ERISA plans must follow their written claims procedures governing the amount of time a plan participant must file an initial claim and appeal any adverse determinations or denials. ERISA requires the plan to provide a reasonable amount of time to submit an initial claim for benefits (e.g., within 90 days) and at least 180 days to appeal claims not paid in full by the plan.
Independent third-party review of denied claims - Non-grandfathered plans must allow at least four months to request a third-party review of an adverse claim decision or for the claimant to supply additional information to the plan to perfect the claim.
Action items: Plans should ensure their claims administrator follows plan terms and removes any time extensions applicable to claims and appeals adopted due to the NE.
Again, it’s important to note that the outbreak period ends upon the earlier of 12 months or 60 days after the NE ends, meaning the maximum time an action period may be suspended is 12 months from the date it was initially triggered. Deciding on which date a particular deadline falls must be an individual-by-individual and action-by-action analysis. In no event may these timeframes be tolled longer than 12 months and some may end sooner if the 12-month window has not run its course by July 10, 2023.
Lockton comment: The outbreak period guidance also granted plan sponsors leeway in meeting plan notice and disclosure deadlines. In our original post (opens a new window) on the matter, we recommended against delaying COBRA notices since it would extend the COBRA duration window and increase the exposure for claims. If the plan sponsor did take advantage of the safe harbor for employer actions, recognize that applicable notice deadlines going forward must adhere to pre-NE COBRA and ERISA rules. Although it isn’t clearly mandatory, many employers may want to issue a notice to employees letting them know that the extended grace period for these action periods will end very soon. Any outstanding COBRA elections, COBRA premium payments, special enrollment requests, claims submission requests, and requests for third-party review of adverse claim determinations will, once again, be subject to pre-NE timeframes.
Impact of Public Health Emergency (PHE) Ending
Shifting gears, the end of the PHE impacts various COVID-era accommodations and mandates and does not require a 60-day runout period like the provisions related to the NE do. Instead, most of these provisions expire for some or all plans immediately upon the PHE expiration date of May 11, 2023:
COVID-19 Testing: Plans will no longer be required to offer cost-free COVID-19 testing to covered individuals. They may, once again, impose cost-sharing and medical management criteria on COVID-19 tests purchased over-the-counter (OTC) or ordered by a physician. This also includes other tests related to ruling out non-coronavirus possibilities, such as the flu and other respiratory illnesses. Plans will again be allowed to limit or eliminate coverage and/or cost-sharing for OTC tests. Of course, many plans may choose to continue to offer no- or low-cost testing, but it will no longer be required.
Lockton comment: Plans sponsors have the opportunity (except those with HDHPs discussed below) to reevaluate whether they wish to continue offering free or low-cost COVID-19 testing. Lockton’s Actuarial Solutions team states that, overall, the testing costs for Lockton clients have been small. If plans decide to provide free COVID-19 testing, there is likely to be an increase in previous costs, due to the ending of the government-provided at-home tests earlier in 2022. Lockton’s actuaries estimate the increase to be around 0.25% of overall plan spend if the plan covers the full cost. Of course, shifting more of the cost to participants will lessen the effects of the increase.
COVID vaccinations: On the flip side, non-grandfathered plans must continue to cover, without cost sharing, in-network coronavirus-related preventive care (e.g., a vaccine) designated as such by the U.S. Preventive Services Task Force or upon approval by the Centers for Disease Control (CDC). This mandate, like the ACA preventive care mandate, generally does not apply to excepted benefits (such as health FSAs) or retiree-only plans. Grandfathered plans may impose cost-sharing requirements on COVID vaccinations.
Lockton Comment: The end of the PHE will also bring an end to the cost subsidies the federal government was providing to medical providers and vaccine manufacturers. Once the supply of vaccines purchased by the federal government is gone, plan sponsors will see an increase in cost due to ingredient cost increases by manufacturers. Lockton’s actuaries estimate the increased cost of vaccine and booster shots to cost plans between 0.5% and 0.75% of current healthcare costs.
Pre-Deductible COVID-19 Diagnosis and Treatment: During the pandemic, the Treasury and IRS allowed HDHP plans to provide “first dollar coverage” for diagnosis and treatment of COVID-19 prior to the deducible being satisfied without jeopardizing HSA eligibility. The relief was stated to last “until further guidance is issued.” We hope to hear more guidance from the Treasury Department/IRS on whether the end of the NE and PHE will cause this temporary relief to lapse and, if so, whether it will end immediately or at the end of the current plan year.
Lockton comment: The oral treatments for COVID-19 have been dispensed at pharmacies, but overall utilization and cost have been low. HDHPs that chose to offer free or low-cost coronavirus treatment to participants may need to reevaluate these provisions now that the NE and PHE are expiring. It is unclear whether the IRS will allow this flexibility to continue without jeopardizing participants’ HSA eligibility.
Telehealth and employee assistance programs (EAPs) offered to those not otherwise enrolled in the major medical plan: Generally, programs that provide significant medical care are group health plans subject to some or all ERISA, COBRA, HIPAA, MHPAEA, and ACA mandates and prohibitions. During the NE and PHE, federal regulators gave special dispensation from complying with some of these rules to allow generous employers to provide temporary access to telehealth-based medical care programs and COVID-19 treatment to all employees, even those not otherwise enrolled in the major medical plan. Once the NE and PHE expire, employers that wish to continue these programs must come into compliance with all laws applicable to major medical plans.
Lockton comment: The greatest increase in telehealth utilization during the pandemic was for mental health diagnosis and treatment. Mental health conditions are now in the top list of diagnoses for telehealth utilization through the health plan. This change may impact mental health access and affordability for members in the future.
Personal Protective Equipment (PPE) is still a qualified medical expense: Remember when the whole country collectively learned the term “PPE” stands for personal protective equipment? PPE was added to the list of qualified medical expenses early in the pandemic and will remain on the list going forward unless the IRS tells us otherwise. Unless we get further guidance or the cafeteria plan specifically restricts coverage for PPE, plan participants may still be reimbursed for these expenses from their health flexible spending account (FSA) or health savings account (HSA).
Return-to-work vaccine mandates: Some states (e.g., New York and Nevada) continue to require covered employers to provide paid leave to employees to obtain COVID vaccinations through Dec. 31, 2023. Vaccine mandates for employment purposes announced by the Biden Administration in September 2021 have seen a significant shift via private litigation for federal contractors and large private employers (i.e., those with 100 or more employees). The mandate is no longer in place for large private employers as of January 2022 or federal contractors as of December 2022. At the time of this alert, healthcare providers and suppliers receiving federal aid are still required to mandate that healthcare workers be vaccinated or, in some states, show proof of a negative COVID-19 test on a weekly basis, although litigation from 22 states’ attorneys general seeks to repeal the mandate. In response to the federal vaccine mandates, several states have since enacted legislation banning private employers from mandating the COVID-19 vaccine.
Plan sponsors should take measures to review their plan documents, procedures, policies, COBRA notices, and other employee communications to ensure they align with the pre-pandemic rules once the PHE and NE end.
Many plan sponsors likely amended their ERISA plans to adopt the PHE mandates and NE/outbreak period accommodations when they were implemented in 2020. Hopefully, those amendments automatically sunset with the end of the NE/PHE, but plan sponsors should review the language. If the amendments did not include a sunset provision, the plans must be amended once again to remove the NE/PHE provisions they do not wish to continue.
Similarly, vaccine and testing mandates may have also been adopted through plan amendment, and any changes the plan sponsor wishes to make to these benefits will likely require a plan amendment. If you decide to make changes to the benefits offered, you must notify plan participants of those material changes, and, notably, if the change affects the information included in the summary of benefits and coverage, the notice must come 60 days prior to implementing the change.
Plan sponsors should keep and safeguard records of their compliance with these rules over the past three years as federal regulators and state agencies may still have interest in auditing plans for compliance with ongoing or expiring rules. Lockton has provided a record retention grid (opens a new window) indicating the timelines and best practices for ensuring you can provide appropriate documentation of your compliance should it be required.
Looking for more details of how all this shakes out? Tune into our CLASS Series Webcast on COVID-19 Recap and Its Lingering Effect on Employee Benefit Plans (opens a new window) on February 9, 2023 at 2pm CST to learn more about how this news will affect benefit plans.