On April 28, 2020, the Departments of Labor (DOL) and the Treasury (Departments) issued deadline relief to help employee benefit plans, plan participants and plan service providers impacted by the COVID-19 outbreak.
Extension of Participant Timeframes
The Departments issued a final rule to provide plan participants with additional time to comply with certain deadlines affecting COBRA continuation coverage, HIPAA special enrollment periods, claims for benefits, appeals of denied claims and external review of certain claims. With regard to disability, retirement and other plans, the final rule provides additional time for participants and beneficiaries to make claims for benefits and appeal denied claims.
According to the Departments, without the extension, individuals might miss key deadlines during the COVID-19 outbreak that could result in the loss or lapse of group health coverage or the denial of a valid claim for benefits. The guidance broadly extends numerous plan deadlines applicable to participants and administrators, and the rule gives several examples. Specifically, the “outbreak period” beginning March 1, 2020, and ending 60 days after the announced end of the COVID-19 emergency is to be “disregarded.” Of particular note:
- COBRA. Multiple COBRA deadlines have been extended until after the outbreak period ends, including: (1) the 30- or 60-day deadline for employers or individuals to notify the plan of a qualifying event; (2) the 60-day deadline for individuals to notify the plan of a determination of disability; (3) the 60-day deadline for participants to elect COBRA; and (4) the 45-day deadline in which to make a first premium payment and 30-day deadline for subsequent premium payments.
- HIPAA Special Enrollment. The 30- and 60-day HIPAA special enrollment periods are extended. Thirty-day special enrollment periods may be triggered when eligible employees or dependents lose eligibility for other health plan coverage in which they were previously enrolled and when an eligible employee acquires a dependent through birth, marriage, adoption or placement for adoption. Sixty-day special enrollment periods may be triggered by changes in eligibility for state premium assistance under the Children’s Health Insurance Program.
The DOL provided multiple examples of how these extensions work.
Deadline Extension for ERISA Notices and Disclosures
In addition, the DOL issued Disaster Relief Notice 2020-01 to extend the time for plan officials to furnish benefit statements, annual funding notices and other notices and disclosures required under ERISA if they make a good faith effort to provide the documents as soon as administratively practicable. The notice explains that good faith acts include use of electronic means of communicating with plan participants who the plan sponsor reasonably believes have effective access to electronic means of communication, including email, text messages and continuous access websites. The DOL also issued a set of Frequently Asked Questions (FAQs) to help plan participants and employers impacted by the COVID-19 outbreak understand their rights and responsibilities under ERISA.
Finally, the IRS has updated its FAQs on filing and payment relief during the COVID-19 emergency to incorporate the additional relief provided in Notice 2020-23. That notice significantly expanded the filings and other actions (otherwise due on or after April 1 and before July 15, 2020) that are eligible for an automatic extension to July 15, 2020. Actions now eligible for the IRS relief include 44 actions relating to employee benefit plans that are listed in Revenue Procedure 2018-58, including loan offsets, excess HSA contributions, etc.
Plan administrators and participants should welcome this relief as businesses and plan administration have been disrupted due to the COVID-19 emergency. However, administrative challenges will undoubtedly arise as plans implement the changes. The guidance acknowledges the uncertain duration of the COVID-19 pandemic and notes that additional guidance will be provided for specific parts of the country if necessary. To date, there is no declared end date for the COVID-19 national emergency. Sixty days after the COVID-19 national emergency is declared over, the extensions will be discontinued. Further, the guidance is vague in certain areas and does not get into great detail in areas such as implementation, integration with existing COBRA rules, etc., so we are hoping for additional guidance on:
- When and how to communicate the extensions to affected participants and beneficiaries. For example, should notices be updated, how much detail would be required, what should be done for people who are already in election periods and were previously informed of a deadline that has now been extended?
- Should past actions be undone, and if so, how? For example, if an individual’s COBRA coverage was terminated in early April for non-payment of March’s premium, can it be reinstated? What happens if an eligible COBRA beneficiary already obtained coverage somewhere else?
Additionally, as we await further guidance, we do not recommend making any terminations at this time for failure to pay or failure to elect until clarification on this guidance becomes available.
Finally, the DOL issued new model General COBRA and COBRA Election notices to help people who may be Medicare-eligible make decisions regarding their coverage.
We will continue to send updates, and you can visit our Coronavirus Resource Library page for more.