New Relief for Employee Benefit Plans and ParticipantsMay 6, 2020 – Alerts
Providing sweeping relief to employee benefit plan sponsors, participants and beneficiaries impacted by the COVID-19 emergency, the Employee Benefits Security Administration joined with the IRS to extend deadlines in order to effectively pause the compliance clock for the duration of the outbreak.
The guidance was released in three documents:
A Joint Notice by EBSA and the IRS that extends time frames affecting continuation of group healthcare coverage under COBRA, special enrollment rights under HIPAA after employment and or coverage ends, as well as time limits for participants in all types of benefit plans to file claims for benefits or appeal denied claims
An EBSA Disaster Relief Notice that extends deadlines by which plan sponsors and administrators must provide notices and make disclosures to participants, deposit contributions, and authorize and complete plan loans and distributions
A set of COVID-19 FAQs for Participants and Beneficiaries that is intended to help participants in employee benefit plans and their beneficiaries understand their rights and responsibilities in light of the COVID-19 emergency
The Joint Notice and EBSA Disaster Relief Notice essentially pause the compliance clock during what is referred to as the Outbreak Period. Although the National Emergency Declaration was issued on March 13, 2020, the Outbreak Period is defined as the period beginning on March 1, 2020, and extending 60 days beyond the date on which the National Emergency is declared to have ended.
Pursuant to the Joint Notice, the entire Outbreak Period is disregarded in determining the following:
- Deadline by which a group health plan must provide notice to qualified beneficiaries of the right to elect continuation of group health coverage under COBRA;
- 60-day period for an employee or other qualified beneficiary to elect COBRA continuation coverage under group health plan;
- 45-day period following COBRA election within which initial COBRA premium must be paid;
- 30-day grace period for a qualified beneficiary to pay COBRA premiums;
- 30-day period (60 days in the case of CHIP) to request enrollment in a group health plan due to a special enrollment event under the Health Insurance Portability and Accountability Act (HIPAA);
- Deadlines by which participants (in group health plan, retirement plan, or other employee benefit plans) must file benefit claims or appeal adverse benefit determinations; and
- Deadline by which a claimant may request external review of a denied appeal under group health plan, as well as the date by which the claimant may file information to perfect that request.
The Joint Notice effectively tolls all of these deadlines until the (as yet unknown) conclusion of the Outbreak Period, but it provides nothing in the way of practical guidance.
Outstanding Questions About COBRA
Importantly, however, the Joint Notice makes no mention of modifying existing forms or notices to reflect the extended deadlines. For example, when providing COBRA election notices to qualified beneficiaries who are about to lose their group health plan coverage, the employer or plan sponsor presumably must caution the recipients that the various deadlines have been extended (or risk exposure to possible fiduciary liability for failure to do so). But how does that plan sponsor know what type of disclosure is required?
Interestingly, on May 1, the Department of Labor released new model COBRA notices. Yet the new general notice and election notice are changed only in so far as sections have been added to explain how Medicare eligibility affects COBRA continuation coverage. A set of Frequently Asked Questions was issued at the same time that provides more detailed information about the coordination between COBRA and Medicare, but it likewise makes no mention of the extended notice, election and premium payment deadlines.
Notification and Reporting Deadlines
The Disaster Relief Notice similarly extends various benefit plan notification and reporting deadlines. Plan fiduciaries will not be considered to have violated ERISA for failure to timely furnish notices or comply with document disclosure due during the Outbreak Period, as long as those fiduciaries act in good faith and furnish the notice or disclosures as soon as administratively feasible. In addition, throughout the Outbreak Period, fiduciaries will be deemed to be acting in good faith when providing those notices or disclosure by electronic means, including email, text messages and continuous access website, to which the fiduciaries have reason to believe the participants have effective access.
Additionally, the failure of a plan to comply with its normal procedural requirements for plan loans and distributions, due to COVID-19, will not be treated as a compliance failure, provided that the plan administrator made a good faith diligent effort under the circumstances to comply with those requirements and provided, further, that the plan administrator makes a reasonable attempt to rectify any procedural deficiencies as soon as practical thereafter.
The Disaster Relief Notice emphasizes that the guiding principle for plans, administrators and other fiduciaries is to act reasonably, prudently and in the best interests of covered employees and their beneficiaries. Plan administrators, according to the EBSA, should make reasonable accommodations as needed to prevent loss of benefits or undue delay of benefit payments.
The COVID-19 FAQs, while not considered formal guidance, address a variety of concerns faced by participants and their families relative to their health and retirement benefits. Among other issues, the FAQs discuss options for replacement of health insurance coverage in the event of loss of eligibility, payment of insurance premiums, requesting plan loans or pre-retirement distributions and how to get further information and assistance.
In summary, these three publications offer welcome and wide-ranging relief. However, plan sponsors, administrators and insurers anxiously await more detailed and substantive guidance as to the effective implementation of the provisions.