Employee benefit plan relief guidelines


On February 26, 2021, the Employee Benefits Security Administration (EBSA) of the Department of Labor issued Notice 2021-01 (the “Notice”). The notice was issued jointly with the Department of the Treasury, the Internal Revenue Service and the Department of Health and Human Services (the “Departments”). Entitled “Advice on Maintaining Relief for Employee Benefit Plans and Plan Members and Beneficiaries Due to the COVID-19 (Novel Coronavirus) Outbreak,” the advisory provides much-needed advice to plan sponsors. group health plans on (among others) when COBRA notices and election periods, which had been previously extended [in May 2020], will end. This guidance was necessary because previous regulatory relief extending COBRA’s notice and election periods was about to expire due to a legal delay.

This article explains the impact of the Notice on group health plan sponsors. Spoiler alert: With the publication of the notice, ministries have chosen an interpretation which, while compliant with applicable law and mindful of the needs of plan members and beneficiaries, is also administratively burdensome. Under the Notice, the period during which certain requirements are paid is determined on an individual basis.

Background

In March of last year, President Trump issued the Proclamation Declaring a National Emergency Regarding the Novel Coronavirus (COVID-19) Outbreak. The President also ruled that effective March 1, 2020, the COVID-19 outbreak was a national emergency under Section 501 (b) of the Robert T. Stafford Disaster Relief Act and emergency aid.

On May 4, 2020, EBSA issued Notice 2020-01 (also issued jointly with departments), which granted relief for certain actions related to employee benefit plans required or authorized under ERISA and of the Internal Revenue Code. In particular, Notice 2020-01 required plan sponsors, as of March 1, 2020, to meet certain deadlines during the COVID-19 national emergency period, plus an additional 60-day period (the “period of ‘outbreak’). The deadlines carried out included: (1) the elections of the COBRA participants; (2) payment of COBRA premiums; (3) the election of special HIPAA registration fees; (4) filing complaints, appeals and requests for external review; and (5) providing COBRA election notice.

In a footnote, Advisory 2020-01 recognized that ERISA §518 and Code §7508A limit the power of the Labor and Treasury Departments to set toll deadlines to a maximum of one year. In this case, the period has been counted from March 1, 2020 to February 28, 2021.

Relief under the notice

Noting that “the stakeholders have inquired about the continuation of the relief” beyond February 28, 2021, the opinion provides the “[i]individuals and plans whose time limits are subject to notice relief will have the applicable notice periods skipped until the earliest of the following dates:

  • 1 year from the date on which they were first eligible for relief, or

  • 60 days after [ ] end of the epidemic period.

As of this date, the notice explains that “the deadlines for individuals and plans whose periods were not taken into account in the notices will resume. In any case, a period not taken into account will exceed 1 year. Here are a handful of examples that clearly show how departments intend to make their succession work, such as:

  • An eligible beneficiary who would have been required to make a COBRA election before March 1, 2020 has until February 28, 2021, which is the first of 1 year from March 1, 2020 or the end of the outbreak period (which remains In progress).

  • An eligible beneficiary who would have been required to make a COBRA election before March 1, 2021, does not need to make his or her election before the earliest of these dates (i.e. March 1, 2022) or the end of the hatching period. .

To be clear: the determination is made participant by participant, each participant having their own toll period.

Reasonable accommodation

Observing that “affected plan members and beneficiaries may continue to experience a range of problems due to the continuing nature of the COVID-19 pandemic,” the opinion offers the prospect of further relief, but subject to certain ” guiding principles “. Specifically, to be eligible, plan sponsors must:

“[A]ct reasonably, prudently and in the best interests of workers and their families who rely on their health, retirement and other benefit plans for their physical and economic well-being.

Among other things, this requires that plans “make reasonable accommodations to prevent loss or undue delay in payment of benefits in such cases and should take steps to minimize the possibility of people losing benefits due to failure to pay benefits. compliance with the pre-established deadline. executives. “All of these actions are consistent with the standards that ERISA imposes on Trustees. We cannot discern anything in the Notice suggesting that the Department of Labor is adding substantial new ERISA fiduciary obligations. Unfortunately, however, it appears to us that the Notice could be read in that sense, and it is hoped, of course, that plan sponsors who follow good fiduciary hygiene will not face penalties for unavoidable or unintentional breaches.

Notice to participants

When the plan administrator knows, or should reasonably be aware, that the end of the relief period for an individual action puts a member or beneficiary at risk of loss of benefits, the administrator is notified under the notice to provide notice regarding the end of the relief period. This means that plan disclosures released before or during the pandemic may need to be reissued or amended.

The opinion goes on to suggest that plans should consider ways to ensure that members and beneficiaries who lose coverage under their group health plans are made aware of other coverage options that may be available to them, for example through the through a state exchange or market.

Finally, the Notice recognizes that there may be instances where full and timely compliance with ERISA’s disclosure and claims handling requirements by plans and service providers may not be possible. The notice makes it clear that the Ministry of Labor’s approach in these cases will be influenced by the fact that a “trustee acted in good faith and with due diligence in the circumstances”.

Conclusion

The advisory leaves employers and other plan sponsors with a good deal to unwrap. While individual toll periods will present enormous challenges to third-party registrars, COBRA administrators, and other service providers, the advisory provides at least one clear line test. Rules governing participant accommodation and reviews continue to present a delicate compliance challenge.

© 1994-2021 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC All rights reserved.Revue nationale de droit, volume XI, number 62


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