Biden Administration Issues New Guidance to Address the Expiring “Outbreak Period” Rule

Last May, the Departments of Treasury and Labor issued a regulation pausing the deadlines associated with many employer-sponsored health plan requirements due to the COVID-19 pandemic.  The rule created an “outbreak period” that started on March 1, 2020, and was intended to last for 60 days past the end of the COVOD-19 national emergency. During this period, days do not count towards the otherwise applicable timeframes for:

  1. COBRA notices, elections, and payment;
  2. HIPAA special enrollment elections;
  3. Claims and appeals procedures; and
  4. External review requests.

However, the legal authority for the “outbreak period rule” comes from Section 518 of the Employee Retirement Income Security Act (ERISA), which allows federal agencies to push ERISA deadlines by “a period of up to 1 year.” One year from March 1, 2020, was February 28, 2021, but the COVID-19 national emergency is still ongoing.

Details of “Outbreak Period” Rule Extension

So, just before the legal authority used by the Trump Administration last May expired, the Biden Administration issued Disaster Relief Notice 2021-01 to explain what will happen next. The guidance declares that the deadline extension does not expire on March 1, 2021, for everyone. Instead, the one-year timeframe will expire on a rolling basis determined by each individual’s triggering event unless the overall outbreak period ends sooner.

So, each affected person’s “outbreak period” will end on the earlier of:

  1. One year from the date an individual was first eligible for relief; or
  2. Sixty days after the President declares the end of the national emergency (which was how the Department of Labor and Treasury defined the length of the “outbreak period” originally).

Examples of “Outbreak Period” Rule Extension

Here are two examples of how this will work in practice using COBRA deadlines for illustrative purposes:

  1. Owen’s original COBRA election period ended March 1, 2020. Now, his last day to elect coverage was February 28, 2021.
  2. Under standard COBRA rules, Cathy’s COBRA election period would end on March 1, 2021. Her election period now ends the earlier of (1) February 28, 2022, or (2) Sixty days after President Biden declares the end of the national emergency period.

Words from the Biden Administration about the “Outbreak Period” Rule Extension

While this guidance solves a pressing legal issue, it also complicates benefits administration everyone involved for the near-term future.  In recognition of this fact, the Biden Administration took explicit care to remind all involved with employee benefits that:

“The guiding principle for administering employee benefit plans is to act reasonably, prudently, and in the interest of the workers and their families who rely on their health, retirement, and other employee benefit plans for their physical and economic well-being. This means that plan fiduciaries should make reasonable accommodations to prevent the loss of or undue delay in the payment of benefits in such cases and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames.”

Disaster Relief Notice 2021-01 suggests that employer plan sponsors should notify affected beneficiaries about the deadline changes as soon as possible. Employers should also reissue any guidance about the “outbreak period” that they may have sent to employees and other plan participants last year.  The guidance explicitly tells employers that actions made to address the end of the outbreak period that are made “in good faith and with reasonable diligence under the circumstances…will be marked by an emphasis on compliance assistance and includes grace periods and other relief.”

Employee Benefits Review

Precision Benefits Group