In accordance with emergency powers granted in the wake of the COVID-19 pandemic, the IRS and DOL have extended a number of deadlines related to benefit plans and granted further relief to members and sponsors. of diets. The Jones Walker of May 22, 2020, Employee Benefits Client Alert, provided a summary of the guidelines.
On Friday, February 26, 2021, the DOL issued additional guidance on certain deadlines related to benefit plans, just before certain relief expires the following Monday. Deadline extensions may continue beyond February 28, 2021, provided the deadline in question has not already been extended by one year from that date, and extensions should be measured individually.
DOL and IRS Final Rule
The final rule of May 4, 2020 generally suspended certain deadlines for benefit plans for the duration of the “hatch period”, which is an indefinite period beginning on March 1, 2020 and ending 60 days after the end of the period. national COVID-19 campaign. emergency. However, the authority given to the DOL and IRS under Section 518 of the ERISA and Section 7508A of the Internal Revenue Code only allows the exemption for a given circumstance to s’ extend over a period of one year (the toll period).
Under the final rule, the epidemic period is not taken into account for the purposes of the following time limits:
The deadline for plan sponsors to issue COBRA qualifying event election notices (normally 44 days for employers who serve as both plan sponsor and plan administrator), although employers are still required to publish notices as soon as administratively possible
The deadline for participants to choose COBRA coverage (normally 60 days after the employer issues a COBRA qualifying event notice)
The deadline for COBRA participants to pay COBRA premiums (normally within 45 days of first choosing COBRA coverage and within 30 days of each monthly due date thereafter)
The deadline for an employee to notify a plan of a COBRA qualifying event, such as a divorce (normally 30 days)
The deadline for requesting a special enrollment under HIPAA portability rules, such as marriage or childbirth (normally 30 days, but 60 days if Medicaid or CHIP coverage is lost)
The deadline for a participant to submit a claim for benefits or to appeal a denial of benefits by an ERISA plan
The deadline for requesting (and refining) the external review of a denied health plan appeal (normally within 120 days of notification of the appeal decision)
Employee Benefits Security Administration (EBSA) Disaster Relief Notice 2020-01
EBSA Notice 2020-01 (EBSA Notice 2020) provided additional relief primarily for plans and plan sponsors. This includes:
Extension of time limits for providing any notices or disclosures (except those described in the final rule above) to plan members, beneficiaries and others under Title I of ERISA during the epidemic period, provided that the employer acts in good faith and provides the notice or disclosure as soon as administratively possible. The EBSA 2020 Notice states that “good faith” includes providing notices electronically, which is expanded to include text messages and continuous access websites.
Extension of the deadline for submitting member contributions and loan repayments to pension plans, provided the failure is solely due to the COVID-19 pandemic.
Failure to follow procedures for non-compliance with loan verification procedures and plan distribution during the outbreak period (other than legal requirements within IRS jurisdiction, such as obtaining consent from the spouse), provided that:
The failure is due to the COVID-19 pandemic.
Diligent efforts in good faith are made to comply with the requirements.
Procedural flaws are corrected as soon as administratively possible.
EBSA Disaster Relief Notice 2021-01
The EBSA 2021-01 Disaster Relief Advisory (EBSA 2021 Advisory) provides that the toll period ends the earlier of (1) one year from the date on which the period would have started to run for the person in question, or (2) the end of the Epidemic Period. Plan administrators must measure toll periods on an individual basis.
For example, if an employee had a COBRA qualifying event on February 15, 2020, that employee’s time to choose COBRA coverage was interrupted at the start of the outbreak period on March 1, 2020, at which time 15 days. have passed. On February 28, 2021, this employee’s one-year toll period ended. The employee has 45 remaining days (i.e. until April 14, 2021) to choose COBRA coverage.
Alternatively, if an employee had a COBRA qualifying event on June 15, 2020, that employee’s election deadline was already set for that date. This employee’s toll period would end one year later, on June 14, 2021 (assuming the outbreak period does not end before that date). Since no part of the election period has elapsed before March 1, 2020, that employee’s 60-day election period begins on June 15, 2021 and the employee will have until August 14, 2021 to elect COBRA.
The EBSA 2021 advisory reminds employers to act reasonably, prudently and in the best interests of employees and their families. Plan trustees should make reasonable accommodations to avoid loss or undue delay in payment of benefits and take steps to help prevent loss of benefits due to missed deadlines.
The 2021 EBSA Notice states that plan trustees should consider advising employees of the end of the relief period. Plan trustees should ideally tailor these notices to each person’s toll period, some of which ended shortly after EBSA issued its last guidelines, and may need to reissue or modify prior disclosures. Finally, plan trustees should consider communicating other coverage options to employees, such as coverage options through Healthcare.gov.
Where the plan trustees have acted in good faith and with due diligence in the circumstances, the approach to applying the DOL “will be marked by an emphasis on compliance assistance” and “grace periods and other reductions ”. Thus, any employer who could not comply with an action, notice or disclosure required due to the pandemic should comply as soon as possible and document their good faith efforts to comply.
Employers should coordinate with their insurers, reinsurance providers, third party administrators, health FSA administrators, COBRA administrators, pension plan registrars and other service providers to determine how they will administer rolling deadline extensions on an individual basis. Employers should do everything possible in accordance with the guidelines above to notify members and beneficiaries of any material changes in plan benefits or procedures, perhaps with the assistance of service providers where possible.
Remember that legal principles can change and vary widely in their application to specific factual circumstances. You should consult a lawyer about your individual plan. The same advice may vary depending on the terms of your plan and specific factual circumstances.