DOL Publishes Participant-Facing COVID-19 FAQs

On April 28, 2020, the DOL’s EBSA published COVID-19 FAQs for Participants and Beneficiaries, including information relating to both health and retirement plans. The FAQs are primarily addressed to participants and beneficiaries (individuals), but have helpful information for employers and plan sponsors.

On the health side, the FAQs include information and reminders on options for employees who may lose their coverage because the employer terminates its business, the plan or the employee’s employment. FAQ 3 outlines these options, including special enrollment in another group health plan (such as a spouse’s employer’s plan), COBRA, Medicaid, CHIP and special enrollment through the exchange (including loss of coverage due to a family member’s death or when an employer stops its COBRA contributions). The FAQs remind employees of the importance of maintaining and submitting documentation for special enrollment periods, and that the employee may have additional flexibility on the timing of notification during the COVID-19 outbreak period.

There are several FAQs relating to business closures. In situations where an employer or the vendor receiving COBRA or other premium payments is closed, or if the employer did not pay the insurance premium for group coverage, the FAQs direct employees to reach out to their employer, a benefit advisor with EBSA or the state insurance commissioner.

Several FAQs remind employees and retirees that employers are under no federal or state obligation to provide benefits and plans, and that employers can terminate benefits and plans at any time. The FAQs do say that such termination depends on the terms of the plan, that notice should be provided in advance (although some notice requirements have been relaxed), and that some benefits may be protected by contractual promise (pursuant to a collective bargaining or other employment agreement). The FAQs remind employees, though, that they have options once benefit eligibility is lost, including the ability to enroll in COBRA and special enrollment rights in another group health plan, a state health insurance exchange or state programs (Medicaid or CHIP). These FAQs point back to plan documents, SPDs, retiree benefit plans/promises and other employment agreements to determine exact benefit promises and obligations.

On the retirement side, FAQs 13 through 15 remind participants to contact their plan administrator regarding filing retirement plan claims, receiving payments and changing investment decisions, and that employees may have to anticipate delays as companies may be slower in processing claims, payments and investment changes. FAQs 16 and 17 relate to preretirement distributions, stating that employees may be able to take early distributions in certain situations (including adverse impact from COVID-19), but that they should remember that the distribution may be taxable and may impact the employee’s ability to qualify for unemployment compensation. FAQs 18 and 19 relate to timing and payment of distributions (which may be delayed), including a reminder that a retirement plan is not required to give an individual a lump-sum distribution. Other FAQs address the concerns relating to retirement plan distributions for a spouse of a deceased employee and to the consequences of a retirement plan termination (which depend heavily on whether the plan was a defined benefit plan or a defined contribution (e.g., 401(k)) plan.

Although directed at individuals, the FAQs contain helpful reminders for employers as plan sponsors. The FAQs also include references to the recently published rules relating to plan notice deadline extensions, which allow for relaxed deadlines for (among other notices) the COBRA and HIPAA SER notices. Employers should review the FAQs and implement processes and procedures to keep employees informed of plan/benefit and administrative changes during the COVID-19 pandemic.