On November 8, 2024, the Department of Labor (DOL) and the Internal Revenue Service (IRS) (collectively, the “Agencies”) published a notice of extension of timeframes for participants to take certain actions under the group health plan. The extension notice can be found at Hurricane Extensions. These Hurricane Extensions provide additional time for affected participants and beneficiaries to take certain actions as described below. Affected participants and beneficiaries are those who resided, lived, or worked in one of the disaster areas listed toward the end of this alert.

The Department of Health and Human Services (HHS) issued its own bulletin on November 14, 2024 with respect to sponsors of non-Federal governmental group health plans/insurers to provide similar relief to participants and beneficiaries. The HHS bulletin can be found at Hurricane Helen Disaster Relief Bulletin.

CHEIRON OBSERVATION: In general, the items receiving  extensions for participants and beneficiaries are similar to those receiving extensions that were provided with respect to COVID-19, e.g., claims filing deadlines, but begin based upon the geographic locale of the participants and beneficiaries, and the extensions all have an end date of May 1, 2025. 

Action Needed: Plan sponsors should review their communications and operating procedures for administration to determine what changes are needed to comply with the extended timeframes.

Background

Section 518 of the Employee Retirement Income Security Act of 1974 (ERISA), as amended, and section 7508A(b) of the Internal Revenue Code of 1986 (the “Code”) provide the Agencies authority to extend certain timeframes otherwise applicable to group health plans, disability plans, and other welfare plans (and pension plans) for a period of up to one year on account of a Presidentially declared disaster. In extending the timeframes, the Agencies are exercising their authority under these sections.

• Overview of Extension of Timeframes:

The Hurricane Extensions notice requires that all group health plans, disability and other employee welfare benefit plans subject to ERISA or the Code must disregard the period from the specified beginning date for the disaster area until May 1, 2025, in applying timeframes for certain actions by plan participants, beneficiaries, qualified beneficiaries, or claimants. The period to be disregarded is called the “Relief Period.” (To the extent the actions, such as claiming benefits, also apply to pension plans, the extended timeframes also apply to pension plans.)

• Extension for Plan Participants, Beneficiaries in Group Health Plans

If the following occur during, or would end during, the Relief Period, then participants, beneficiaries, and claimants have extended timeframes:

• • The 60-day election period for COBRA continuation coverage,
  • The date for making COBRA premium payments,
  • The 30-day period (or 60-day period, if applicable) to request special enrollment (such as adding dependents due to marriage, birth, or adoption),
  • The date for individuals to notify the plan of a qualifying event or determination of disability,
  • The date within which individuals may file a benefit claim under the plan’s claims procedure,
  • The date within which claimants may file an appeal of an adverse benefit determination,
  • The date within which claimants may file a request for an external review after receipt of an adverse benefit determination or final internal adverse benefit determination, and
  • The date within which a claimant may file information to perfect a request for external review upon a finding that the request was not complete.

The chart below compares the normal rules to the new extensions.

• Extension for Group Health Plans

With respect to group health plans and their sponsors and administrators, the Relief Period shall be disregarded when determining the date for providing a COBRA election notice giving the group health plan 74 days (104 days if the employer is also the plan administrator) after May 1, 2025, less the number of days elapsed as of the start of the Relief Period to send the COBRA election notice. If the notice is sent 60 (or more) days after May 1, 2025, then the participants would only have the normal 60 days after receiving the notice to elect COBRA.

CHEIRON OBSERVATIONS: The extension of timeframes has a substantial impact on the administration of group health plans. In essence, the Agencies are requiring that plans either “stop the clock” (for periods that were running), or delay the “start of the clock” (for periods that would otherwise start) during the Relief Period.

The Hurricane Extension contains helpful examples that illustrate the application of the extensions, which are at the end of the notice (see above link).

The Hurricane Extension could impact contracts between health care providers and network managers/insurers as enrollments could be retroactively adjusted for more than the industry standard 60 days or even six months typically allowed in a standard Plan Sponsor-Network Manager contract. In addition, some insurers, plans, and even provider contracts have claim filing deadlines that arguably will have to be adjusted.

The extension of timeframes is likely to increase plan costs (both for administration and claims payments). Determining which participants are eligible for the relief could be time-consuming for some administrators. In addition, the extension of time with respect to the election of COBRA coverage increases the opportunity for adverse selection, as qualified beneficiaries can wait until after they have a need for care to determine if they want to elect COBRA coverage.

• Relief Period and Designated Disaster Areas

The Relief Period begins on a date determined by the geographical location of the disaster area designated for Individual Assistance by the Federal Emergency Management Agency (FEMA). For all such designated areas, the Relief Period ends on May 1, 2025. The designated disaster areas are in the following six states: Florida, Georgia, South Carolina, North Carolina, Tennessee, and Virginia. There are five different dates for the start of the Relief Period. The starting dates of the Relief Period and the disaster areas to which they apply are shown in the following tables.¹

CHEIRON OBSERVATION: The relief does not describe what happens when an affected participant or beneficiary lives in one area and works in another area that has a different start date.  Prudence would suggest that the earlier start date be used.

If you have any questions about these timeframes, please contact your Cheiron consultant.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Accordingly, we do not provide legal services or tax advice.

¹The disaster areas for each Hurricane or Tropical Storm are listed in the following FEMA disaster declarations: 4827, 4828, 4829, 4830, 4831, and 4834.  Some areas in Florida are listed for both Hurricane Helene and Hurricane Milton, but under the Hurricanes Extension, the date for Hurricane Helene applies.