Prepare for COVID-19 legislative and regulatory requirements
As expected, the Biden Administration has begun to take steps that will have an impact on employer sponsored benefit plans. Below are the potential changes you may see in the next few weeks and months so that you’re prepared to address these when (and if) they happen.
Executive orders cannot directly change the law or regulations. But, executive actions typically instruct the regulatory agencies to review existing rules and see if they can be changed to accomplish the goals articulated in the order.
Executive Order on Vaccine-Related Issues
This wide-ranging order was principally related to vaccine distribution issues, but also could impact employer-sponsored health plans. It is expected that the regulatory agencies will issues rules that will require health plans to cover all COVID-19-related testing, even if not done for diagnostic purposes, as the current rule requires. This would mean that the health plan would have to cover 100% of testing costs even when testing is required by an employer for employment purposes.
Executive Order on Strengthening the ACA and Other Health Issues
In this order, the Biden Administration took direct aim at reversing some of the Trump Administration policies that are viewed as weakening the ACA and potentially hurting the individual health insurance market.
This order revokes the 2017 Trump Administration executive orders that were the impetus behind agency rule changes regarding short-term health plans, association health plans, and individual coverage HRAs (ICHRAs). Revoking the Trump Administration orders does not immediately change anything, but it instructs the regulatory agencies to review rules that were written based on those orders and to consider changes. Here are some probable outcomes from this order:
It is very likely that the Trump Administration rules that expanded short-term health plans will be rolled back, and that short-term plans will be more limited in scope and duration.
Association Health Plan (AHP) rules, which expanded the types of groups and participants eligible for AHP coverage, will also probably be rescinded or significantly changed. These rules are currently tied up in the courts, so there has been very little actual activity related to the new AHP rules to date.
There may be changes to ICHRA rules; however, the general consensus is that it is unlikely that these rules will be significantly changed.
This executive order also prompted the Department of Health and Human Services (HHS) to create a new special open enrollment period for individuals to purchase health insurance through Healthcare.gov. The special open enrollment period will run from February 15 through May 15. Many states that operate their own public marketplace have also opened similar special enrollment periods.
New COVID Relief Legislation
The first draft of new COVID-19 relief legislation has been released in the House of Representatives. There are a couple of items in the proposed legislation that we are watching. First, the bill would expand subsidies for eligible individuals who purchase individual health insurance through a public marketplace. For the first time, subsidies would be available to individuals making more than 400% of FPL, and subsidies for lower-income individuals would be increased. Second, a COBRA subsidy may finally be about to happen.
COBRA Subsidy Details
As currently written, the new legislation would create a COBRA subsidy that would cover 85% of an individual’s cost of COBRA coverage after an involuntary termination of employment or a reduction in hours. The subsidy would be available from the month after the passage of the bill through the end of September 2021. The subsidy would not be available to employees who voluntarily terminate their employment.
The COBRA QB would be required to pay only 15% of the applicable COBRA premium.
The employer/plan sponsor would recover the amount not paid by the participant through a refundable payroll tax credit process. This would work in the same way that employers currently recover costs for FFCRA required paid emergency leave.
Individuals who experienced a qualifying COBRA event prior to the effective date of the legislation and who did not elect COBRA, or who elected and subsequently dropped COBRA, would be allowed to “re-enroll” in COBRA for the remainder of their COBRA eligibility to take advantage of the subsidy.
Not surprisingly, there are also new COBRA notice requirements:
COBRA election notices would need to be updated to include information about the subsidy.
A special notice would need to be sent to individuals who are eligible to re-enroll in COBRA, as described above.
Shortly before the subsidy period ends, a “termination of subsidy” notice will need to be sent to COBRA QBs who are taking advantage of the subsidy.
Note that the regulatory agencies have not yet acted on the executive orders related to short-term heath pans, AHPs, and ICHRAs, and that the COVID relief bill is still just an early draft of the legislation that will be debated over the upcoming days and weeks. It is very possible the details will change. It is even possible that the COBRA subsidy will not make it into the final version of legislation that is ultimately passed by Congress. So stay tuned! We will let you know more as things develop.