The United States Department of Labor’s Employee Benefits Security Administration and the IRS recently issued the following coordinated guidelines providing additional relief to benefit plan sponsors, trustees, participants and beneficiaries who must overcome challenges related to employment. compliance with administrative requirements and deadlines under ERISA due to the COVID-19 outbreak and quarantine measures:
- EBSA Disaster Relief Notice 2020-01 grants trustees and plan sponsors additional time to meet notification and disclosure obligations under Title I of ERISA, and announces relaxation of DOL’s application of certain operational requirements relating to changes to the ERISA plan, plan loans, deposit of member contributions and timing of prohibition notices.
- Joint notice (published as Final Rule 85 Fed. Reg. 26351, May 4, 2020) extends certain time limits affecting a member’s entitlement to health care coverage, portability and continued group health plan coverage under COBRA. The joint notice also extends the time period given to plan members to file or complete claims for benefits or appeals of denied claims.
Notice 2020-01 and the Joint Notice are summarized below.
Extension of certain ERISA TITLE I deadlines
Notice 2020-01 extends the time limits that apply to certain notices, disclosures and documents that must be provided under Title I of ERISA during the COVID-19 outbreak. The extension is subject to the limitation under ERISA §518 which allows the DOL to disregard periods up to one year in determining the timeframe for actions to be taken under a scheme. employee benefits in the event of a president-declared disaster or public health emergency.
During the period from March 1, 2020 (date of entry into force of the national COVID-19 emergency declared by the President (“national emergency”)) until the 60th day after the end of the national emergency is declared or on any other date that the agencies may announce (the “Epidemic Period”), an employee benefit plan and the responsible plan trustee will not be in violation of ERISA if action is taken in good faith to provide a notice, disclosure or document as soon as administratively possible in the circumstances.
Acts of good faith include the use of alternative electronic means of communication with plan members and beneficiaries who, in the opinion of the plan trustee, have effective access to electronic means of communication, including email, text messages and continuous access websites. Relief applies to plan information such as summary plan descriptions, summaries of material changes, annual summary reports, annual funding notices, qualified default investment notices and periodic benefit statements. pensions that are due at any time during the outbreak period.
The DOL will issue additional guidance if different epidemic end dates apply for different parts of the United States.
Clarification of Form 5500 Filing Due Date Extensions
Notice 2020-01 confirms that the DOL has not yet extended the July 31, 2020 Form 5500 annual report due date (subject to extension) for calendar year 2019 plans. previously issued COVID-19 emergency, IRS Notice 2020-23, extended the Form 5500 filing deadline to July 14, 2020, for plans whose filing deadline otherwise occurs during the period of April 1, 2020 to July 14, 2020.)
Extension of prohibition notices
Under Notice 2020-01, any notice of a blackout period for an individual plan of account that is due during the outbreak period will not be subject to an ERISA violation if the plan and the responsible trustee act to good faith and provide the opinion as soon as administratively possible given the circumstances. In addition, where the plan administrator has been unable to provide 30 days notice of a blackout period under 29 CFR 2520.101-3 due to the pandemic, the DOL will not require the Plan Trustee determined in writing that the delay was caused by events beyond the reasonable control of the Plan Administrator.
Plan Loan Administration Relief
- Errors in Plan Loan Verification Procedures
In accordance with Notice 2020-01, the DOL will not treat a failure of a qualified pension plan to follow the procedural requirements for plan loans or distributions imposed by the terms of the plan as a failure if (i) that failure is solely attributable to the COVID outbreak of -19; (ii) the plan administrator makes a diligent effort in good faith in the circumstances to comply with those requirements; and (iii) the plan administrator makes a reasonable effort to correct any procedural deficiencies, such as gathering any missing documentation, as soon as administratively possible.
This exemption only covers the verification requirements required under the provisions of Title I of ERISA which fall under the interpretation and regulatory authority of the DOL, and, for example, does not include the consent of the spouse or other legal or regulatory requirements within the jurisdiction of the IRS.
- Relief from prohibited transactions for loans granted under the CARES Act
The CARES law (see our separate alert on the CARES law, here) provides COVID-19 relief to eligible pension plan members by expanding access to plan loans in the form of a higher loan limit and delayed repayment terms. Under Notice 2020-01, the relief from prohibited transactions under Article 408 (b) (1) of ERISA will not be lost solely because the plan has granted a loan to a qualified person for the loan relief period in accordance with the CARES Act, or because a Qualified Person has delayed repayment of a plan loan in accordance with the CARES Act and the provisions of any related IRS notices or other published guidelines.
Some diet changes linked to the COVID-19 outbreak
Advisory 2020-01 provides that, if a qualifying pension plan is amended to provide for increased loan amounts or coronavirus-related distributions made available under the CARES Act (see our separate CARES Act alert, here), the DOL will treat the plan as operated in accordance with the terms of this amendment. before its adoption if (1) the modification is (i) made on or before the last day of the first year of the plan beginning on or after January 1, 2022 (or on a later date prescribed by the Secretary of the Treasury), and (ii) made retroactive to March 27, 2020, and (2) the plan is managed in full compliance with the provisions of the CARES Act (section 2202) governing new loan relief and coronavirus-related distributions during this period.
Delays in depositing plan assets from member contributions and loan repayments
A member’s salary contributions and loan repayments made from payroll deductions are considered eligible pension plan assets under ERISA. As a general rule, these funds should be transferred to the plan on the earliest date on which these amounts can reasonably be separated from the employer’s general assets (but in no case after the 15th working day of the month following the month in which the amounts were paid or withheld by the employer).
Under Notice 2020-01, the DOL will not take any enforcement action regarding a temporary delay in the transmission of such payments or contributions to a qualified pension plan during the outbreak period if the delay is solely due to the COVID-19 epidemic. In the event of such delay, employers and service providers must act reasonably, prudently and in the best interests of employees to comply as soon as administratively possible in the circumstances.
According to the joint opinion, the epidemic period is are not taken into account for the purposes of calculating the following periods and deadlines applicable to group health, disability and other employee benefit plans, and to taxable pension plans subject to ERISA:
- Deadlines for participants according to ERISA complaints procedures, including for the filing of initial claims and appeals of adverse benefit determinations.
- HIPAA Special Registration Period must be available to individuals through a group health plan in certain circumstances, including when an employee or dependent loses eligibility for a group health plan or other insurance coverage- illness, or when an employee experiences the addition of a dependent by birth, marriage, adoption, or placement for adoption. Typically, the enrollment period is 30 days (or 60 days in the case of special enrollment fees added by the Children’s Health Insurance Program Reauthorization Act 2009).
- COBRA notices and election periods:
- Group health plan 14-day to notify a beneficiary qualified of COBRA eligibility.
- 60-day employee election period covered for COBRA continuous coverage.
- 30-day grace period for the COBRA enrollee to make COBRA premium payments.
- 60-day period of the covered employee (or eligible beneficiary) to notify the administrator of the occurrence of an eligible event (divorce, separation, change of dependent child status) or of a determination of disability .
- Deadlines for requesting an external review of group health insurance claims:
- The four-month period during which applicants can file a request for external review after receiving an adverse benefit determination or a final internal adverse benefit determination.
- The date on which an applicant can file information to complete a request for external review if it finds that the request was not complete (whichever is later than the four-month filing period or within 48 hours of receipt request for additional information to complete the request).