As discussed further in a previous Sidley Update, in response to the national emergency caused by the COVID-19 pandemic (National Emergency), on May 4, 2020, the U.S. Department of Labor, Department of the Treasury, and Internal Revenue Service (collectively, the Agencies) issued guidance extending the timeframes by which certain actions must be completed with respect to employee benefit plans and their participants and beneficiaries (the Initial Guidance). On February 26, 2021, the Agencies released EBSA Disaster Relief Notice 2021-01, which provided information regarding the termination of these extensions.
Initial Guidance
The Initial Guidance provided that all group health plans, disability and other employee welfare benefit plans, and employee pension benefit plans were required to disregard the period from March 1, 2020, until 60 days after the announced end of the National Emergency (the Outbreak Period) in determining the following periods and dates:
1. With respect to plan participants, beneficiaries, qualified beneficiaries, and claimants:
a. the 30- or 60-day period to request Health Insurance Portability and Accountability Act special enrollment
b. the 60-day election period for Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage
c. the date by which COBRA premium payments must be made
d. the date by which individuals must notify the plan of a COBRA qualifying event or determination of disability
e. the date by which individuals may file a benefit claim or appeal under the plan’s claims and appeals procedures
f. the date by which individuals may file a request for an external review or file information to perfect an incomplete request for external review
2. With respect to group health plans and their sponsors and administrators, the date by which a COBRA election notice must be provided.
However, under the applicable statutes, the Agencies’ suspension authority in connection with the National Emergency is limited to one year. As the one-year anniversary of the COVID-19 pandemic approached, this created uncertainty regarding the administration of the deadline extensions, given that the pandemic is ongoing. Many believed that deadlines would be reinstated in full on February 28, 2021.
New Guidance
EBSA Disaster Relief Notice 2021-01 instead provides that the one-year maximum extension must be applied on an individual-by-individual basis — an employee-friendly determination but one that creates significant complexity in plan administration.
Notice 2021-01 states that individuals and plans with extended timeframes subject to the Initial Guidelines will have the applicable periods disregarded until the earlier of (i) one year from the date they were first eligible for the relief and (ii) the end of the Outbreak Period (i.e., 60 days after the announced end of the National Emergency). On the earlier such date, the applicable timeframe for individuals and plans with previously disregarded periods will resume. In no case will the disregarded period exceed one year.
For example, assume that Individual A works for Employer X and participates in X’s group health plan. If A previously would have been required to make a COBRA election by March 1, 2020, under the new guidance, this requirement would be delayed until the earlier of (i) February 28, 2021, or (ii) the end of the Outbreak Period (which remains ongoing). Whereas if A previously would have been required to make a COBRA election by March 1, 2021, under the new guidance, this requirement would be delayed until the earlier of (i) March 1, 2022, or (ii) the end of the Outbreak Period.
Notice 2021-01 further provides that plan fiduciaries should make reasonable accommodations to help prevent undue delay in payment of benefits to affected individuals and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established timeframes.
Moving Forward
Plan administrators should discuss administration of the extensions with plan third-party administrators, who may need to rebuild administrative systems to reflect these customized deadlines. Plan administrators also should notify employees of the end of the relief period. Plan disclosures may need to be reissued or amended to reflect correct deadlines. The guidance suggests that as part of these communications/disclosures, the plan administrator should consider informing participants of other available coverage options, such as the Health Insurance Marketplace.
If plans wish to provide extensions longer than required under the above-described guidance (e.g., in an effort to create more uniform administration or to avoid loss of coverage due to participant confusion over the deadline extensions), they first should confirm that such voluntary extensions do not create issues under insured arrangements or stop-loss policies.
