PPI in the News Compliance Corner - April 15, 2021 Archive
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On April 7, 2021, the DOL issued guidance regarding the COBRA subsidy provisions under the American Rescue Plan Act of 2021 (ARPA). As a reminder, the ARPA allows certain individuals to elect COBRA coverage and have that COBRA coverage 100% subsidized by the federal government from April 1, 2021, to September 30, 2021. An individual must have experienced a reduction of hours or termination of their employment (other than by reason of such employee's gross misconduct) in order to apply this subsidy. These individuals are referred to as Assistance Eligible Individuals or AEIs. A person who voluntarily terminates their employment is not eligible for this subsidy. The DOL’s guidance includes a series of FAQs, model notices and related information.

FAQs

The DOL provides 22 FAQs that regarding implementation of the COBRA requirements under ARPA. The topics addressed by the FAQs are as follows:

• FAQs 1 – 6: general information
• FAQs 7 – 9: premiums
• FAQs 10 – 12: notices
• FAQs 13 – 21: individual questions for employees and their families
• FAQ 22 (mis-numbered Q21): additional information

Several of the questions provide clarification of ARPA. According to FAQ number 2, premium subsidy provisions apply to all group health plans sponsored by private-sector employers or employee organizations (unions) subject to the COBRA rules. They also apply to plans sponsored by state or local governments subject to the continuation provisions under the Public Health Service Act. Premium subsidies are also available for group health insurance required under state mini-COBRA laws.

FAQ number 3 clarifies who is an AEI. In addition to those individuals who experienced a termination of employment (except for those who voluntarily terminated), an individual appears to be an AEI if they experience a reduction of hours, regardless of whether such a reduction is voluntary or involuntary. Examples of a “reduction of hours” include any temporary leaves of absence, an individual’s participation in a lawful labor strike and appears to include medical leave that does not result in the termination of the individual’s employment. If an individual is eligible through a spouse’s plan, then they are not an AEI. An individual is an AEI if they are on Medicaid or a marketplace/exchange plan. However, those who enroll in COBRA continuation with premium assistance will not be eligible for a premium tax credit on the exchange.

FAQ number 10 highlights an important caveat concerning eligibility for premium subsidies: individuals are not AEIs if their maximum COBRA continuation coverage period (if COBRA had been elected or not discontinued) would have ended before April 1, 2021. According to the FAQ, this generally means the COBRA subsidies will not apply to those individuals with applicable qualifying events before October 1, 2019.

The FAQs also clarify issues surrounding enrollment. Note that employers have until May 31, 2021, to provide notice to AEIs of their right to elect COBRA and receive subsidies under the ARPA. According to FAQ number 10, regular rules regarding COBRA notice distribution apply, including distribution by email. FAQ number 13 states that AEIs have 60 days from receipt of the notice to elect COBRA or they forfeit their right to elect COBRA subsidies. FAQ number 5 states that AEIs can choose to have prospective coverage from the date of election or, if they have a qualifying event on or before April 1, retroactive coverage to April 1. FAQ number 16 states that qualified beneficiaries who didn’t independently elect may do so now. Further, individuals who believe that they qualify for premium assistance need to complete and submit a form entitled Request for Treatment as an Assistance Eligible Individual, as well as an election form. And FAQ number 4 states that individuals may have a special enrollment period on the exchange after the subsidy ends.

The last major topic covered by the FAQs concerns enforcement of these requirements. According to both FAQ number 10 and FAQ number 12, employers who violate COBRA rules (including the requirement to offer a COBRA election and subsidies under the ARPA) could be subject to penalties equal to $100 per qualified beneficiary or $200 per family for every day that the employer violates COBRA rules. If individuals believe that they have not received an offer of COBRA due to them, then they are advised to contact the DOL.

FAQs »

Model Notices

The DOL also published four model notices: a “General Notice,” an “Alternative Notice,” a “Notice in Connection with Extended Election Periods” and a “Notice of Expiration of Period of Premium Assistance.”

The General Notice should be provided to all individuals who experience a qualifying event from April 1, 2021, through September 30, 2021. It includes information related to the premium assistance, and other rights and obligations under the ARPA, as well as all of the information required in an election notice. It also includes information on the health insurance marketplace, Medicaid and Medicare. The General Notice satisfies existing requirements for the content of a standard COBRA election notice as well as those required by the ARPA.

The Alternative Notice must be sent by issuers that offer group health insurance coverage subject to continuation coverage requirements imposed by state law that differ from those imposed by federal law (e.g., employers with fewer than 20 employees may be covered by certain state healthcare continuation laws). The Alternative Notice must be provided to all qualified beneficiaries, not just covered employees, who have experienced a qualifying event at any time from April 1, 2021, through September 30, 2021, regardless of the type of qualifying event. The Alternative Notice serves as a template that can be modified for each state’s requirements.

The Notice in Connection with Extended Election Periods must be distributed to AEIs (or any individual who would be an AEI if a COBRA continuation coverage election were in effect) who became entitled to elect COBRA continuation coverage before April 1, 2021. This notice covers the rights of AEIs to elect COBRA coverage as discussed above and provides them with the forms necessary to do so.

The Notice of Expiration of Period of Premium Assistance must be provided 15 – 45 days before the date of expiration of premium assistance and informs AEIs of the expiration and the date that the subsidies will expire. This notice must also provide information concerning eligibility for coverage without any premium assistance through either COBRA continuation coverage or coverage under a group health plan. This notice is not required if an AEI becomes eligible under a group health plan (excluding excepted benefits, a QSEHRA or a health FSA) or for Medicare. This notice may note that the individual and any covered dependents may be eligible for a special enrollment period to enroll in individual market health insurance coverage.

In addition to the specific requirements of each notice, the General Notice, the Alternative Notice and the Notice in Connection with Extended Election Periods must include the following information:

• A prominent description of the availability of premium assistance, including any conditions on the entitlement.
• A form to request treatment as an “Assistance Eligible Individual” (as discussed above).
• The name, address and telephone number of the plan administrator (and any other person with relevant information about the premium assistance).
• A description of the obligation of individuals paying reduced premiums who become eligible for other coverage to notify the plan and the penalty for failing to meet this obligation.
• A description of the opportunity to switch coverage options, if applicable.

The DOL also provided a PDF summarizing the COBRA premium assistance provisions of the ARPA, which includes the forms necessary to request treatment as an AEI.

Model Notices »
Summary of COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021 »

Related Materials

In addition to the FAQs and model notices, the DOL also linked to a number of publications that provide information on COBRA, retirement and health benefits for dislocated workers and those experiencing job loss, and HHS guidance on the ARPA.

Employers should familiarize themselves with this guidance as they prepare to comply with the ARPA COBRA provisions. The Benefits Compliance team expects that the federal government will provide more guidance in the coming weeks. We will continue to analyze subsequent guidance and provide resources to explain the continued developments.

COBRA Premium Subsidy Webpage »

On April 2, 2021, the DOL, HHS and the Treasury (collectively, “the Departments”) jointly released FAQs regarding recent amendments to the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). The guidance is intended to assist group health plan sponsors in understanding the new MHPAEA obligations imposed by the Consolidated Appropriations Act of 2021 (CAA).

As background, the MHPAEA generally provides that financial requirements and treatment limitations imposed on a plan’s mental health or substance use disorder (MH/SUD) benefits cannot be more restrictive than those applicable to medical/surgical benefits in a classification. Furthermore, separate treatment limitations cannot be imposed only on MH/SUD benefits. These MHPAEA provisions apply to both quantitative treatment limitations, such as the number of doctor visits, and non-quantitative treatment limitations (NQTLs), such as preauthorization requirements, step protocols or experimental treatment limitations.

The CAA, which was enacted on December 27, 2020, requires group health plans and issuers to perform and document their comparative analyses of the design and application of any NQTLs imposed upon MH/SUD benefits. Effective February 10, 2021, plans must be prepared to provide the analyses to the Departments (or applicable state authorities or participants) upon request.

Accordingly, the FAQs explain that for an analysis to be treated as sufficient under the CAA, it must contain a detailed, written, and reasoned explanation regarding the bases for the plan’s conclusion that the NQTLs comply with the MHPAEA. FAQ #3 specifies that such analyses should include, but not necessarily be limited to:

1. A clear description of the specific NQTLs, plan terms and policies at issue
2. Identification of the specific MH/SUD and medical/surgical benefits to which the NQTLs apply within each benefit classification
3. Identification of any factors, evidentiary standards or sources, or strategies or processes considered in the design or application of the NQTLs
4. Precise definitions and supporting sources for any factors, standards, strategies or processes defined in a quantitative manner
5. An explanation as to whether any factors were given more weight than others and the reason(s) for doing so, or whether there was any variation in the application of a guideline or standard used by the plan between MH/SUD and medical/surgical benefits
6. If the application of the NQTL turns on specific benefit administration decisions, an identification of the nature of the decisions, the decision maker(s), the timing of the decisions and the qualifications of the decision maker(s)
7. If the plan’s analyses relied upon any experts, an assessment of each expert’s qualifications and the extent to which the plan relied upon each expert’s evaluations in setting recommendations regarding both MH/SUD and medical/surgical benefits
8. A reasoned discussion of the plan’s findings and conclusions as to the comparability of the processes, strategies, evidentiary standards, factors and sources within each affected classification, and their relative stringency, both as applied and as written
9. The date of the analyses and the name, title and position of the person(s) who performed or participated in the comparative analyses

Employers are encouraged to refer to the MHPAEA Self-Compliance Tool, which is accessible on the DOL website, for guidance related to these NQTL requirements and the necessary analyses process. In particular, the Self-Compliance Tool outlines four steps that plans should take to assess their compliance with MHPAEA for NQTLs. The FAQs indicate that plans that have followed the guidance in the Self-Compliance Tool should be well prepared to satisfy a comparative analyses request.

Plans should also be prepared to provide applicable supporting documentation, such as claims processing policies and procedures, referenced studies or internal testing results.

In the near term, the DOL expects to focus on the following NQTLs in its enforcement efforts:

1. Prior authorization requirements for in-network and out-of-network inpatient services
2. Concurrent review for in-network and out-of-network inpatient and outpatient services
3. Standards for provider admission to participate in a network, including reimbursement rates
4. Out-of-network reimbursement rates (plan methods for determining usual, customary and reasonable charges)

However, the guidance makes clear that a review, once initiated, may not necessarily be limited to these particular NQTLs. Additionally, a comparative analysis may be requested if the Departments become aware of potential MHPAEA NQTL violations or complaints.

If a plan’s submission of a comparative analysis results in a determination that the plan is not in compliance with the MHPAEA, the plan would be required to submit additional comparative analyses that demonstrate compliance within 45 days. If the Departments make a final determination that the plan is still not in compliance following the 45-day corrective action period, all enrollees would need to be notified within seven days. In addition, the compliance findings would be shared with the state where the group health plan is located.

The FAQs also confirm that the comparative analyses and other applicable information should be made available to ERISA plan participants, beneficiaries and enrollees upon request. Additionally, in the event of a claim appeal, a participant’s right to documents and information would include the MHPAEA analyses and related materials, if relevant to the adverse benefit determination.

Employers that sponsor plans offering MH/SUD benefits should be aware of the enhanced MHPAEA compliance obligations imposed by the CAA and this related guidance. These employers should ensure that NQTL comparative analysis is performed and documented for each NQTL under their plans and be prepared to provide the required comparative analyses upon request. Consultation with carriers and/or TPAs will likely be necessary to verify and coordinate the necessary data to complete the analyses. Employers should refer to the DOL MHPAEA Self-Compliance Tool and consult with counsel for further guidance.

FAQS About Mental Health and Substance Use Disorder Parity Implementation and the Consolidated Appropriations Act, 2021 Part 45 »

The IRS has issued a summary of the top mistakes made by plan administrators utilizing the Voluntary Correction Program (VCP). As a reminder, the VCP is a way for retirement plans to receive IRS approval on corrections to plan documents or operational failures that would otherwise jeopardize the plan's tax-favored or qualified status. Thus, it is important the submission is free of errors to avoid denial of the submission or a delayed approval.

The top errors include:

• Failure to combine PDF documents into a single PDF file that does not exceed 15MB
• Failure to pay the correct VCP user fee, which is based on plan assets or listing an incorrect bank account/routing number
• Incorrect completion of Pay.gov Form 8950
  • The name of the plan sponsor doesn't match the name on the other documents in the submission
  • Incorrect EIN provided
  • An officer of the plan sponsor didn't sign the form
• Insufficient narrative provided
  • The descriptions of the failure(s) or corrective changes are not detailed enough
  • The submission does not identify a plan qualification failure under IRC Section 401(a)
• Failure to include a copy of the plan document

Please see the guidance for a complete discussion and for helpful resources including instructional videos and helpline numbers.

Top Mistakes in VCP Submissions »