DOL Issues Clarification on the Extension of Certain Timeframes for Employee Benefits Plans
On Friday, February 26, 2021, the DOL released EBSA Disaster Relief Notice 2021-01 (the “clarifying notice”). The notice provides guidance on the duration of the COVID-19 relief that was originally provided in the Notice of Extension of Certain Timeframes for Employee Benefit Plans, Participants and Beneficiaries (the “notice of extension”). (We discussed this notice in the May 15, 2020, edition of Compliance Corner.)
Recognizing the potential difficulties for group health plans to comply with certain notice obligations due to the COVID-19 public health crisis, and to minimize the possibility of individuals losing benefits due to a failure to timely meet requirements, the Departments of Labor and the Treasury extended certain timeframes for group health plans, disability and other welfare plans, and pension plans in May of 2020.
The relief provided that all group health plans, disability and other employee welfare benefit plans, and employee pension plans subject to ERISA or the Code were required to disregard the period from March 1, 2020, until 60 days after the end of the national emergency (known as the “outbreak period”) for certain deadlines, including:
- The 30-day (or 60-day, if applicable) deadline to request a special enrollment under HIPAA.
- The 60-day COBRA election period.
- The 30-day (or 60-day, if applicable) deadline to notify the plan of a COBRA qualifying event (and the 60-day deadline for individuals to notify the plan of a determination of a disability).
- The 14-day deadline for plan administrators to furnish COBRA election notices.
- The 45-day deadline for participants to make a first COBRA premium payment and 30-day deadline for subsequent COBRA premium payments.
- Deadlines for individuals to file claims for benefits, for initial disposition of claims, and for providing claimants a reasonable opportunity to appeal adverse benefit determinations under ERISA plans and non-grandfathered group health plans.
- Deadlines for providing a state or federal external review process following exhaustion of the plan’s internal appeals procedures for non-grandfathered group health plans.
The statute that the DOL and IRS relied upon to provide these extensions appeared to allow for extensions of up to one year. As a result, many in the employee benefits industry concluded that the relief would only last until February 28, 2021 (which was one year from the March 1, 2020, effective date of the notice of extension).
EBSA Disaster Relief Notice 2021-01
However, in the clarifying notice the DOL stated that the extension of timeframes will continue until the earlier of a) one year from the date an individual or plan is first eligible for relief or b) 60 days after the announced end of the national emergency (the end of the outbreak period). Since the pandemic is ongoing, and the president has not announced an end to the national emergency, the outbreak period has not ended.
The DOL’s clarifying notice further explains that the duration of the relief provided under the notice of extension is statutorily limited to a period of one year from the date the individual action would otherwise have been required or permitted. So instead of the one-year limit being assessed from the effective date of the notice of extension, it is assessed based on when an individual or plan first needed to utilize the relief. This means that until the end of the outbreak period, the period that is disregarded will vary depending on when the triggering deadline occurs. For some purposes, this will result in a participant-by-participant analysis of the extension of certain timeframes.
Notably, this explanation of the relief clarifies how it will apply in different scenarios. Consider the following examples:
- Under normal circumstances, a COBRA-qualified beneficiary whose COBRA election period began January 2, 2020, would be required to make a COBRA election by March 1, 2020. However, because the disregarded period can only last one year, this individual had until February 28, 2021, to elect COBRA.
- A COBRA-qualified beneficiary whose COBRA election period began June 1, 2020, would have normally been required to make a COBRA election by July 30, 2020. However, due to the disregarded period, this individual now has until end of the outbreak period or July 29, 2021, whichever is earlier, to make a COBRA election.
- A COBRA-qualified beneficiary whose COBRA election period began February 15, 2020, would have their COBRA election period disregarded beginning on March 1, 2020. The disregarded period would last through February 28, 2021, and then they would receive the balance of their 60-day COBRA election period (roughly 45 days).
- An employee has a baby on August 20, 2020. The plan normally allows 30 days from the date of birth for the employee to request a HIPAA special enrollment. The disregarded period would last until the earlier of the end of the outbreak period or August 19, 2021, and then the 30-day special enrollment election period would begin.
- An employer’s health FSA has a claims submission date of 90 days following the end of the plan year, which would have been March 31, 2020, for the 2019 plan year. The disregarded period began March 1, 2020, and continued for one year through February 28, 2021, after which FSA participants will have an additional 30 days to submit claims (the balance of their claims submission period).
Many employers must continue to honor the extended timeframes for individuals who become eligible to make certain elections in 2020 or 2021. Currently, only individuals who became eligible to make these elections at the very beginning of the COVID-19 pandemic will have exhausted their timeframes under this relief. So employers will need to work with their vendors and plan administrators to ensure that timelines are being administered in accordance with the new understanding of the DOL’s guidance.
To avoid the possibility of individuals losing benefits, the DOL expects employers to notify plan participants or beneficiaries that their relief period has ended or will end. Additionally, employers should consider reissuing plan disclosures that were issued during the pandemic in order to provide accurate information regarding the deadline by which individuals will need to act. The DOL also encouraged employers to provide information about the opportunity to obtain coverage through the federal or state exchanges.
Since the pandemic continues to disrupt plans’ operations, the DOL will continue to provide enforcement relief for fiduciaries who act in good faith and with reasonable diligence under the circumstances.
The NFP Benefits Compliance team will continue to review the new guidance and provide clarifying materials where possible. Employers should work with their service providers to continue to comply with this requirement.
EBSA Disaster Relief Notice 2021-01 »
Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak Final Rule »
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