QUESTION: Although Medicare entitlement is listed as a COBRA triggering event, our company’s COBRA TPA does not offer COBRA to covered employees when they become entitled to Medicare. Is Medicare entitlement a COBRA qualifying event for active employees who become entitled to Medicare but do not lose coverage under our group health plan?
ANSWER: Medicare entitlement is not a COBRA qualifying event for active employees who become entitled to Medicare but do not lose coverage under a group health plan. If a COBRA triggering event (such as Medicare entitlement) does not cause a loss of plan coverage, there is no qualifying event, and COBRA need not be offered. Medicare entitlement rarely causes a loss of plan coverage for active employees and, therefore, will rarely be a qualifying event. This is because the Medicare Secondary Payer (MSP) rules generally prohibit group health plans from making Medicare entitlement an event that causes a loss of coverage for active employees.
The MSP statute generally prohibits a group health plan from “taking into account” the age-based or disability-based Medicare entitlement of an individual who is covered under the plan by virtue of the individual’s current employment status. In addition, the plan generally must provide a current employee who is age 65 or older with the same benefits, under the same conditions, as those provided to employees who are under age 65. Among the employer or insurer actions that constitute an impermissible “taking into account” are (1) terminating coverage because the individual has become entitled to age-based Medicare; or (2) in the case of a large group health plan, denying or terminating coverage because the individual is entitled to disability-based Medicare without also denying or terminating coverage for similarly situated individuals who are not entitled to disability-based Medicare. (Special rules apply for ESRD-based Medicare.) Consequently, Medicare entitlement will rarely be a COBRA qualifying event because it will rarely cause a loss of plan coverage for active employees.
Be aware, however, that it is permissible under the MSP rules for Medicare entitlement to cause a loss of coverage for covered retired employees. In such a case, Medicare entitlement would constitute a qualifying event for the affected spouse and dependent children (not for the covered retiree), permitting them to elect up to 36 months of COBRA under the plan.
QUESTION: As required, our company’s group health plan has extended COBRA election and payment deadlines due to the COVID-19 emergency. How do we handle these deadlines once the outbreak period ends?
ANSWER: As you note, certain COBRA deadlines have been extended—but for no longer than one year—by disregarding (tolling) the COVID-19 “outbreak period,” which began March 1, 2020, and is set to end on July 10, 2023. Agency guidance issued in March 2023 provided examples illustrating the effect of the outbreak period’s end on COBRA election and premium payment deadlines:
Electing COBRA. If a participant experiences a qualifying event and is provided a COBRA election notice on or before July 10, 2023, the individual’s 60-day period to elect COBRA begins to run on July 10, 2023 (making the deadline September 8, 2023). If the qualifying event occurs after July 10, 2023, there is no extension, and the 60-day period is measured from the date the COBRA election notice is provided. Although not expressly addressed, it appears that if a qualifying event occurs on or before July 10, 2023, and the COBRA election notice is provided after that date, the COBRA election deadline would be measured from the provision of the notice.
Paying COBRA Premiums. The guidance provides an example of a COBRA election made on October 15, 2022, retroactive to October 1, 2022. The initial COBRA payment, covering premiums from October 2022 through July 2023 must be made no later than 45 days after July 10, 2023 (i.e., August 24, 2023), with subsequent payments due according to the regular COBRA timeline (the first day of each month of coverage, with a 30-day grace period).
In addition to COBRA deadlines, the end of the outbreak period also affects certain other plan-related deadlines, including those for claims and appeals and HIPAA special enrollments. The agencies have noted that nothing in the Code or ERISA prevents group health plans from continuing to extend deadlines and have encouraged plans to do so—at least for a while—as the outbreak period comes to an end. Keep in mind, however, that any extension beyond what is required should be cleared with plan insurers and stop-loss insurers, as applicable.
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QUESTION: We are considering offering a telehealth benefit to our employees that would be separate from our major medical plan. Will this arrangement be an ERISA plan?
ANSWER: Telehealth benefits (also referred to as telemedicine benefits) are often offered under an employer’s group health plan, which is governed by ERISA if sponsored by a private sector employer. Even if telehealth benefits are offered separately from the employer’s group health plan, the benefits are likely subject to ERISA.
In general, an arrangement is an ERISA welfare benefit plan if it is a plan, fund, or program established or maintained by an employer to provide its employees with ERISA-listed benefits. Here is a summary of each element of the definition:
Plan, fund, or program. An arrangement that provides “one-off” benefits and thus does not require an “ongoing administrative scheme” might not be considered a plan, fund, or program subject to ERISA. It is difficult to imagine a telehealth benefit that would not involve ongoing administration, so this element will likely be met.
Established or maintained by an employer for its employees. You have indicated that this benefit would be offered by the company, so this element will be met.
Providing ERISA-listed benefits. Medical benefits are among the benefits listed in ERISA, and telehealth is clearly medical care, so this element will be met.
Under a DOL regulatory safe harbor, certain group insurance arrangements with minimal employer involvement may be exempt from ERISA even if they provide ERISA-listed benefits. If your arrangement is a voluntary employee-pay-all telehealth benefit offered by a third party, with employer involvement limited as set forth in the safe harbor, it would not be an ERISA plan. If it does not meet all the requirements of the safe harbor, it will be an ERISA plan and must comply with the generally applicable rules, such as having a plan administrator, claim and appeal procedures, and a summary plan description.
As a group health plan, a telehealth plan raises legal issues aside from ERISA’s applicability, including considerations under COBRA, HIPAA, and coverage mandates such as first-dollar coverage of preventive services, not imposing annual or lifetime dollar limits on essential health benefits, and parity in mental health and substance use disorder benefits. Note that telehealth-only plans meeting specified criteria have been temporarily exempt from certain of these mandates for certain plan years beginning before the end of the COVID-19 emergency.
Moreover, telehealth coverage may affect an individual’s ability to contribute to a health savings account (HSA), although temporary relief provides that telehealth and other remote care services provided on or after January 1, 2020, will not cause a loss of HSA eligibility for plan years beginning on or before December 31, 2021; for months beginning after March 31, 2022, and before January 1, 2023; and for plan years beginning after December 31, 2022, and before January 1, 2025
Question: During the COVID-19 pandemic, we established a telehealth-only plan to provide benefits to individuals who were not eligible for coverage under our regular group health plan. Can we continue to offer this benefit?
ANSWER: During the COVID-19 pandemic, telehealth-only benefits have been exempt from certain requirements that otherwise apply to group health plans. This relief is linked to the COVID-19 public health emergency (PHE), which appears slated to end on May 11, 2023. Once the exemption is no longer available, a telehealth-only plan may continue but it would have to meet those requirements.
As group health plans, telehealth plans must comply with the many rules applicable to group health plans under ERISA, COBRA, HIPAA, and the Affordable Care Act (ACA). The COVID-19 telehealth relief exempts certain plans from the ACA’s prohibition on annual and lifetime limits and its preventive services mandate—but not from other ACA mandates. The relief applies to any arrangement sponsored by a large employer (generally, one with at least 51 employees) that provides solely telehealth and other remote-care benefits and is offered only to employees or dependents who are not eligible for coverage under any other group health plan offered by that employer.
The relief took effect in 2020 and applies for the duration of any plan year beginning before the end of the COVID-19 PHE. If the PHE ends on May 11, 2023, a calendar year telehealth-only plan could remain covered by the exemption until the end of 2023. But if the plan year is, for example, June 1–May 31, the relief applies only until the end of the current plan year on May 31, 2023; as of June 1, 2023, that plan would have to comply with the preventive services mandate and the prohibition on annual and lifetime limits.
