Employee benefit plan administration is no small feat. However, it is becoming more and more difficult, especially with pandemic related modifications. As you may recall from our previous Client Alert regarding the Outbreak Period, various benefit deadlines were extended due to COVID-19. Plans could not deny certain benefits or impose certain deadlines during the designated Outbreak Period (i.e., March 1, 2020 through 60 days after the National Emergency ends (or another specified date)). However, when the Outbreak Period ends has been a lingering question recently, and the Department of Labor has just answered it in a way that may make plan administrators’ heads spin.
In summary, the period of time which must be disregarded for certain benefits deadline purposes (such as HIPAA special enrollment, as well as certain COBRA and claims procedure due dates) will now end on the earlier of: (a) 1 year from the date that the individual or plan was first eligible for the particular relief, or (b) 60 days after the announced end of the National Emergency (the end of the Outbreak Period). What does this mean? It means that plan administrators must keep track on a case-by-case basis of each individual who would have had a deadline imposed on/or after March 1, 2020 but for the 2020 relief, the date of the original deadline, and track one year from that date (unless the Outbreak Period ends earlier).
Last year when the pandemic hit, and to assist plan participants and beneficiaries, employers and other plan sponsors, plan fiduciaries, and other service providers of employee benefit plans impacted by the COVID-19 pandemic, the U.S. government took the following action as authorized by ERISA Section 518:
2020 Disaster Relief Notice
On April 28, 2020, the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) issued EBSA Disaster Relief Notice 2020-01 (Disaster Relief Notice). The Disaster Relief Notice provided deadline relief and other guidance and extended the time for plan officials to furnish benefit statements, annual funding notices, and other notices and disclosures required by Title I of the Employee Retirement Income Security Act of 1974 (ERISA).
2020 Joint Notice
Additionally, on April 28, 2020, the Department of Treasury, the Internal Revenue Service (IRS), and EBSA issued a joint notice which extended certain time frames affecting participants and beneficiaries under ERISA and the Internal Revenue Code (Joint Notice). The Joint Notice extended time frames affecting a participant’s right to group health plan coverage during the COVID-19 outbreak, special enrollment periods, and COBRA continuation of such coverage. Time periods for filing claims for benefits, appealing denied claims, and external review periods were also extended.
The Joint Notice is applicable to all group health plans, disability plans, other employee welfare benefit plans, and employee pension benefit plans subject to ERISA or the Code. Specifically, the Joint Notice provided that these plans must disregard the period from March 1, 2020 until sixty (60) days after the National Emergency ends (or other specified date) when determining certain deadlines for plan participants, beneficiaries, qualified beneficiaries, and claimants. This period is called the Outbreak Period. In particular, plans must disregard the Outbreak Period for the following due dates:
- HIPAA Special Enrollment
- COBRA Election Period
- COBRA Premium Payment Due Date
- Date for Individuals to Notify the Plan of Qualifying Events or Disability Determinations
- Claim Procedure Date for Individuals to File A Benefit Claim
- Keep in mind health FSA runout periods and forfeitures are also delayed during this period
- Claim Procedure Date for Claimants to File An Appeal
- Date for Claimants to File A Request for External Review
- Date for Claimants to Perfect A Request for External Review
Note: The Joint Notice only extended the claims procedure deadlines for claimants; it did not explicitly extend the date by which a plan administrator had to respond to claims and appeals. However, the plan administrator’s deadlines for issuing such adverse benefit determination on claims and appeals would appear to fall within the general notice and disclosure relief provided by the Disaster Relief Notice.
Additionally, for purposes of group health plan obligations, the Outbreak Period is disregarded for the following:
- Date to Provide a COBRA Election Notice
Employers and Plan Sponsors have had to pay close attention to these deadlines as they can have significant administrative and economic impacts.
However, many have questioned whether the deadline extension would end on February 28, 2021 due to statutory provisions within ERISA and the Internal Revenue Code stating that with such declared disasters, the Secretaries of Labor and Treasury may provide that periods of time up to one year may be disregarded when determining certain deadlines. That one year period from March 1, 2020 would have expired February 28, 2021.
However, the Department of Labor answered at the last hour, and unfortunately, the difficulty of these previous administrative functions has just been magnified.
Answer: EBSA Disaster Relief Notice 2021-01 (Released Friday, February 26, 2021)
On Friday, February 26, 2021, the Department of Labor released EBSA Disaster Relief Notice 2021-01. The Departments of Treasury, IRS and HHS have reviewed and concur with this guidance.
Instead of ending the disregarded periods on February 28, 2021, or instead of extending the period of disregarded periods to a future date certain, the Department of Labor instituted a case by case analysis, applicable to individuals and plans for whom timeframes were extended. Specifically, individuals and plans who are subject to the relief afforded under the 2020 Disaster Relief Notice and the 2020 Joint Notice as described above will have the applicable periods under the Notices disregarded until the earlier of:
(a) 1 year from the date they were first eligible for relief, or
(b) 60 days after the announced end of the National Emergency (the end of the Outbreak Period).
On the applicable date, the timeframes for individuals and plans with periods that were previously disregarded under the Notices will resume. In no case will a disregarded period exceed 1 year.
Notice 2021-01 provides examples to illustrate application of the above:
If a qualified beneficiary, for example, would have been required to make a COBRA election by March 1, 2020, the Joint Notice delays that requirement until February 28, 2021, which is the earlier of 1 year from March 1, 2020 or the end of the Outbreak Period (which remains ongoing). Similarly, if a qualified beneficiary would have been required to make a COBRA election by March 1, 2021, the Joint Notice delays that election requirement until the earlier of 1 year from that date (i.e., March 1, 2022) or the end of the Outbreak Period. Likewise, if a plan would have been required to furnish a notice or disclosure by March 1, 2020, the relief under the Notices would end with respect to that notice or disclosure on February 28, 2021. The responsible plan fiduciary would be required to ensure that the notice or disclosure was furnished on or before March 1, 2021. In all of these examples, the delay for actions required or permitted that is provided by the Notices does not exceed 1 year.
The Department of Labor further reiterates concerns over COVID-19 related problems that plan participants and beneficiaries may encounter. In such vain, the Department states as follows:
- plan fiduciaries should make reasonable accommodations to prevent the loss of or undue delay in payment of benefits in cases where pandemic delayed deadlines are reinstated; and
- plans should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames, such as:
- affirmatively sending a notice regarding the end of the relief period;
- reissuing or amending disclosures regarding the end of the relief period and the time period in which participants and beneficiaries are required to take action, e.g., COBRA election notices and claims procedure notices;
- reminding participants and beneficiaries who are losing coverage under ERISA group health plans that other coverage options may be available to them, including the opportunity to obtain coverage through the Health Insurance Marketplace in their state.
The Department of Labor understands that full and timely compliance with ERISA’s disclosure and claims processing requirements by plans and service providers may not always be possible due to the end of the relief period. Good faith compliance will be taken into consideration.
The case-by-case determinations were not anticipated last year and will require continual monitoring and possibly enhanced recordkeeping, especially if initially imposed deadlines were not accurately recorded at the time due to the deadline delay. Plan sponsors should promptly speak with their benefit and COBRA administrators to ensure the new guidance can be followed. And, as mentioned by the Department of Labor, group health plan communications regarding these deadline changes should be made as quickly as possible.
As you are well aware, the law and guidance are rapidly evolving in this area. Please check with your Fraser Trebilcock attorney for the most recent updates.
We have created a response team to the rapidly changing COVID-19 situation and the law and guidance that follows, so we will continue to post any new developments. You can view our COVID-19 Response Page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.
Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or email@example.com.
Brian T. Gallagher is an attorney at Fraser Trebilcock specializing in ERISA, Employee Benefits, and Deferred and Executive Compensation. He can be reached at (517) 377-0886 or firstname.lastname@example.org.