The Department of Labor (DOL) on February 26, 2021 issued the Employee Benefits Security Administration (EBSA) Disaster Relief Notice 2021-01 which provides guidance on the length of COVID-19 relief to be allowed under the Timeline Extension Rule.
Background:
On March 13, 2020, President Trump declared a national emergency related to COVID-19 and established that the emergency declaration would be effective retroactive to March 1, 2020. A national emergency declaration gives authority to the Secretaries of the Treasury and Labor to postpone up to one year any deadline under the IRS or ERISA. The first action by the agencies was published in Notice 2020-23 which extended deadlines for “time sensitive actions.” On May 4th, 2020 the EBSA, a division of the Department of Labor, and the IRS filed a joint notice which extended numerous deadlines applicable to employee benefit plans that are subject to ERISA.
The joint agency notice released on May 4th required plans to disregard the period from March 1, 2020 and ending 60 days following the termination of the COVID-19 national emergency (this is referred to the “Outbreak Period”) when determining deadlines for:
- Enrolling in the plan under a HIPAA special enrollment event;
- Electing COBRA continuation coverage;
- Making COBRA premium payments;
- Notifying the plan of a COBRA qualifying event or determination of a disability;
- Filing an initial benefit claim;
- Filing an appeal of an adverse benefit determination; and
- Requesting an external review after receipt of a final adverse benefit determination.
Even though the national emergency is still ongoing, under ERISA section 518 and IRS code section 7508A, the statutory authority of the agencies to extend ERISA deadlines does not exceed one year. That would mean that regardless of the continuation of the national emergency, the extension of the timelines for the events above would have ceased on February 28, 2021, one year following the start of the Outbreak Period.
EBSA Disaster Relief Notice 2021-01
In order to create a way around the statutory limitations to extending some ERISA deadlines, the agencies adopted an approach of applying the one-year limit per individual rather than to the national emergency as a whole. In other words, each individual who is impacted by a potential timeline extension will have their own individual end date the earlier of one year after they were eligible for relief or 60 days following the end of the national emergency.
The notice provided examples:
“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.”
Reasonable Accommodations
Due to the one-year limit, the DOL recognizes that there may be some hardships for individual plan participants for whom extension relief is no longer available. The DOL requests plan sponsors to make a reasonable accommodation for these participants and to try and minimize the possibility of individuals losing benefits because of failure to comply with pre-established time frames. The DOL suggests:
- The plan sponsor should consider affirmatively sending a notice regarding the end of the relief period when individuals are about to lose coverage. DG Response: We are working with our COBRA administration vendor to determine what we can provide regarding notice and tracking of timelines. We will update our COBRA clients once we have finalized a solution.
- Plan disclosures issued before or during the pandemic may need to be reissued or amended to provide more up to date information. DG Response: We are working with the PHIA group to determine the adequacy of our current timeline extension amendment. If we need to update/reissue the amendment, you will be contacted.
- Plan sponsors should find a way to notify participants losing coverage of other coverage options, such as marketplace exchanges. DG Response: Our COBRA election notices do inform members of their rights to obtain coverage on the state’s health insurance marketplace.
Diversified Group is working with our vendor partners and legal counsel to ensure that we are providing the best solutions for our clients with this issue. We will send out further updates as they become available.
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