Hurricane relief

[SLuskin]

I have a client in an area devastated by Hurricane Frances. They have a 9/30 plan year end, and have requested an extension of their open enrollment. All of the meetings had been cancelled, their server was down for 10 days, and all their forms were swept away. They have just reopened their office, but don't think they can get it done in the next 12 days. They would like to give the employees a 10/31 deadline, but not pay claims incurred prior to the date on the election form. Does anyone think such relief is possible? Thank you.

[GBurns]

In my opinion No.

I have to first assume that this is a self insured plan, because you have left the decision regarding continuity of coverage etc up to the employer rather than to an insurance company.

If it is self insured the PD and SPD etc surely state a non renewal provision. However, if there is going to be termination of coverage but not termination of the Plan, that should cause the need for COBRA, shouldn't it? If there is going to be a COBRA issue, Why bother?

If there is going to be termination of the Plan, I think that there is the issue of "bad faith" since these employees were already informed and made to expect continuity of coverage and based on the lateness of this, there is insufficient notice time to do otherwise.

Additionally, although state law might be pre-empted and the Plan might not be prohibited from termination etc by the Governor's order, the area has been declared a Federal disaster area by the President and as such termination or a major change in coverage would possibly be a violation. Legal advice is suggested.

In any case, the ethics of any employer who would even consider this just because of 1 month's claims, should be questioned. Also consider that any claims made that are possibly attributed to the Hurricane might be reimburseable under their General Liability and other Loss coverages as being a Casualty loss etc.

The fact that there is no OE in time for the new plan year does not stop coverage from the old plan year to be extended. Also an OE for the new plan year is most likely not necessary to give coverage anyhow, the employees can continue with the same level of previous coverage into the new plan year without an OE. The pupose of the OE is to allow changes, is it not? The election of a coverage level has nothing to do with the granting of coverage (automatic enrollment or otherwise) anyhow.

Is there something I missed? I cannot understand why this employer even has any concern about the issue, since there is no issue. Either extend the plan year or rollover the elections until.

[oriecat]

I think he is talking about FSA plans. (At least that was my assumption based on the post being in the Cafeplan section of the board....)

[SLuskin]

Yes, sorry, I was talking about FSA.

[GBurns]

I do not think that an FSA makes any difference.