U.S. Department of Labor and IRS Extend Certain Employee Benefit Deadlines due to COVID-19
On April 29, 2020, the U.S. Department of Labor (“DOL”) along with the Internal Revenue Service (“IRS”) issued a joint final rule extending specific deadlines affecting COBRA continuation coverage, special enrollment periods, claims for benefits, appeals of denied claims, and external review of certain claims. Simultaneously, the DOL issued guidance in the form of Notice 2020-01 (the "Notice") extending the deadline for issuing certain notices required under ERISA. The joint final rule and the Notice are summarized in this E-News Alert. Also simultaneously, the DOL issued 23 questions-and-answers covering health and retirement plan benefits, in a document entitled: COVID-19 FAQs for Participants and Beneficiaries. Although the question-and-answer document is directed to participants and beneficiaries, plan administrators may find it contains helpful summaries of various notice and timing requirements. A link to the DOL question-and-answer document can be found here.
Joint final rule
Relief for Plan Participants, Beneficiaries, Qualified Beneficiaries, and Claimants
The joint final rule issued by the DOL and IRS announces an extension for a number of deadlines so plan participants, beneficiaries, and employers have additional time to make critical health coverage and other decisions affecting benefits during the COVID-19 outbreak.[1] As summarized below, the joint final rule provides extra time for participants and beneficiaries of group health plans to meet certain deadlines affecting COBRA continuation coverage, special enrollment, filing claims for benefits, appeals of denied claims, and external review of certain claims. For disability, retirement and other plans, participants and beneficiaries have extra time to make claims for benefits and appeal denied claims. Plans, plan administrators, and employers have extra time to provide certain COBRA notices.
All group health plans, disability plans, and other employee welfare benefit plans, and employee pension benefit plans subject to ERISA (the Employee Retirement Income Security Act of 1974 as amended) or the Code (the Internal Revenue Code of 1986 as amended) must disregard the period from March 1, 2020 until sixty (60) days after the announced end of the COVID-19 National Emergency (the “Outbreak Period”)[2] for all plan participants, beneficiaries, qualified beneficiaries, or claimants wherever located in determining the following periods and dates:
- The 30-day period (or 60-day period, if applicable) to request special enrollment under ERISA and the Code. Background: In general, HIPAA (Health Insurance Portability and Accountability Act of 1996 as amended) requires a special enrollment period in certain circumstances, including when an employee or dependent loses eligibility for any group health plan or other health insurance coverage in which the employee or the employee’s dependents were previously enrolled, and when a person becomes a dependent of an eligible employee by birth, marriage, adoption, or placement for adoption. Generally, group health plans must allow such individuals to enroll in the group health plan if they are otherwise eligible and if enrollment is requested within 30 days of the occurrence of the event (or within 60 days, in the case of the special enrollment rights added by the Children’s Health Insurance Program Reauthorization Act of 2009).
The DOL/IRS provide helpful examples, replicated below, some of which illustrate that the calculation of the delay period is not necessarily as straightforward as one might initially believe. All the examples assume the National Emergency ends on April 30, 2020, with the Outbreak Period ending on June 29, 2020 (the 60th day after the end of the National Emergency).
Example: (i) Facts. Individual B is eligible for, but previously declined participation in, her employer-sponsored group health plan. On March 31, 2020, Individual B gave birth and would like to enroll herself and the child into her employer’s plan; however, open enrollment does not begin until November 15. When may Individual B exercise her special enrollment rights?
(ii) Conclusion. The Outbreak Period is disregarded for purposes of determining Individual B’s special enrollment period. Individual B and her child qualify for special enrollment into her employer’s plan as early as the date of the child’s birth. Individual B may exercise her special enrollment rights for herself and her child into her employer’s plan until 30 days after June 29, 2020, which is July 29, 2020, provided that she pays the premiums for any period of coverage
- The 60-day election period for COBRA continuation coverage under ERISA section. Background: The COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985 as amended) continuation coverage provisions generally provide a qualified beneficiary a period of at least 60 days to elect COBRA continuation coverage under a group health plan.
Example: (i) Facts. Individual A works for Employer X and participates in X’s group health plan. Due to the National Emergency, Individual A experiences a qualifying event for COBRA purposes as a result of a reduction of hours below the hours necessary to meet the group health plan’s eligibility requirements and has no other coverage. Individual A is provided a COBRA election notice on April 1, 2020. What is the deadline for A to elect COBRA?
(ii) Conclusion. Individual A is eligible to elect COBRA coverage under Employer X’s plan. The Outbreak Period is disregarded for purposes of determining Individual A’s COBRA election period. The last day of Individual A’s COBRA election period is 60 days after June 29, 2020, which is August 28, 2020.
- The date for making COBRA premium payments. Background: Plans are required to allow payment of premiums in monthly installments, and plans cannot require payment of premiums before 45 days after the day of the initial COBRA election. COBRA continuation coverage may be terminated for failure to pay premiums timely. Under the COBRA rules, a premium is considered paid timely if it is made not later than 30 days after the first day of the period for which payment is being made.
Example: (i) Facts. On March 1, 2020, Individual C was receiving COBRA continuation coverage under a group health plan. More than 45 days had passed since Individual C had elected COBRA. Monthly premium payments are due by the first of the month. The plan does not permit qualified beneficiaries longer than the statutory 30-day grace period for making premium payments. Individual C made a timely February payment, but did not make the March payment or any subsequent payments during the Outbreak Period. As of July 1, Individual C has made no premium payments for March, April, May, or June. Does Individual C lose COBRA coverage, and if so for which month(s)?
(ii) Conclusion. The Outbreak Period is disregarded for purposes of determining whether monthly COBRA premium installment payments are timely. Premium payments made by 30 days after June 29, 2020, which is July 29, 2020, for March, April, May, and June 2020, are timely, and Individual C is entitled to COBRA continuation coverage for these months if she timely makes payment. Under the terms of the COBRA statute, premium payments are timely if made within 30 days from the date they are first due. In calculating the 30-day period, however, the Outbreak Period is disregarded, and payments for March, April, May, and June are all deemed to be timely if they are made within 30 days after the end of the Outbreak Period. Accordingly, premium payments for four months (i.e., March, April, May, and June) are all due by July 29, 2020. Individual C is eligible to receive coverage under the terms of the plan during this interim period even though some or all of Individual C’s premium payments may not be received until July 29, 2020. Since the due dates for Individual C’s premiums would be postponed and Individual C’s payment for premiums would be retroactive during the initial COBRA election period, Individual C’s insurer or plan may not deny coverage, and may make retroactive payments for benefits and services received by the participant during this time.
Example: (i) Facts. Same facts as the above example. By July 29, 2020, Individual C made a payment equal to two months’ premiums. For how long does Individual C have COBRA continuation coverage?
(ii) Conclusion. Individual C is entitled to COBRA continuation coverage for March and April of 2020, the two months for which timely premium payments were made, and Individual C is not entitled to COBRA continuation coverage for any month after April 2020. Benefits and services provided by the group health plan (e.g., doctors’ visits or filled prescriptions) that occurred on or before April 30, 2020 would be covered under the terms of the plan. The plan would not be obligated to cover benefits or services that occurred after April 2020.
- The date for individuals to notify the plan of a qualifying event or determination of disability for COBRA purposes. Background: Notice requirements prescribe time periods for employers to notify the plan of certain qualifying events and for individuals to notify the plan of certain qualifying events or a determination of disability for COBRA purposes.
- The date within which individuals may file a benefit claim under the plan’s claims procedure. Background: Provisions incorporated into ERISA and the Code require ERISA-covered employee benefit plans and non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage to establish and maintain a procedure governing the filing and initial disposition of benefit claims, and to provide claimants with a reasonable opportunity to appeal an adverse benefit determination to an appropriate named fiduciary.
Example: (i) Facts. Individual D is a participant in a group health plan. On March 1, 2020, Individual D received medical treatment for a condition covered under the plan, but a claim relating to the medical treatment was not submitted until April 1, 2021. Under the plan, claims must be submitted within 365 days of the participant’s receipt of the medical treatment. Was Individual D’s claim timely?
(ii) Conclusion. Yes. For purposes of determining the 365-day period applicable to Individual D’s claim, the Outbreak Period is disregarded. Therefore, Individual D’s last day to submit a claim is 365 days after June 29, 2020, which is June 29, 2021, so Individual D’s claim was timely.
- The date within which claimants may file an appeal of an adverse benefit determination under the plan’s claims procedure. Background: Group health plans and disability plans must provide claimants at least 180 days following receipt of an adverse benefit determination to appeal (60 days in the case of pension plans and other welfare plans).
Example (disability plan). (i) Facts. Individual E received a notification of an adverse benefit determination from Individual E’s disability plan on January 28, 2020. The notification advised Individual E that there are 180 days within which to file an appeal. What is Individual E’s appeal deadline?
(ii) Conclusion. When determining the 180-day period within which Individual E’s appeal must be filed, the Outbreak Period is disregarded. Therefore, Individual E’s last day to submit an appeal is 148 days (180 – 32 days following January 28 to March 1) after June 29, 2020, which is November 24, 2020.
Example (employee pension benefit plan). (i) Facts. Individual F received a notice of adverse benefit determination from Individual F’s 401(k) plan on April 15, 2020. The notification advised Individual F that there are 60 days within which to file an appeal. What is Individual F’s appeal deadline?
(ii) Conclusion. When determining the 60-day period within which Individual F’s appeal must be filed, the Outbreak Period is disregarded. Therefore, Individual F’s last day to submit an appeal is 60 days after June 29, 2020, which is August 28, 2020.
- The date within which claimants may file a request for an external review after receipt of an adverse benefit determination or final internal adverse benefit determination. Background: Provisions incorporated into ERISA and the Code set out standards for external review that apply to non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage and provides for either a state external review process or a Federal external review process. Standards for external review processes and timeframes for submitting claims to the independent reviewer for group health plans or health insurance issuers may vary depending on whether a plan uses a State or Federal external review process. For plans or issuers that use the Federal external review process, the process must allow at least four months after the receipt of a notice of an adverse benefit determination or final internal adverse benefit determination for a request for an external review to be filed.
- The date within which a claimant may file information to perfect a request for external review upon a finding that the request was not complete. Background: The Federal external review process also provides for a preliminary review of a request for external review. The regulation provides that if such request is not complete, the Federal external review process must provide for a notification that describes the information or materials needed to make the request complete, and the plan or issuer must allow a claimant to perfect the request for external review within the four-month filing period or within the 48-hour period following the receipt of the notification, whichever is later.
Relief for Group Health Plans
With respect to group health plans, and their sponsors and administrators, the Outbreak Period shall be disregarded when determining the date for providing a COBRA election notice. Background: Notice requirements prescribe a time period for plans to notify qualified beneficiaries of their rights to elect COBRA continuation coverage.
DOL's extension of deadlines to provide other notices to participants
- General extension deadline for required notices under ERISA
Excluding those notices and deadlines discussed in the joint final rule (and summarized above), in Employee Benefits Security Administration (“EBSA”) Disaster Relief Notice 2020-01 the DOL extends the deadline to furnish other required notices and disclosures to plan participants, beneficiaries, and other persons required under Title I of ERISA (e.g. those provisions of ERISA subject to DOL jurisdiction).[3]
The Notice states that an employee benefit plan and the responsible plan fiduciary will not be in violation of ERISA for a failure to timely furnish a notice, disclosure, or document that must be furnished between March 1, 2020, and 60 days after the announced end of the COVID-19 National Emergency, if the plan and responsible fiduciary act in good faith and furnish the notice, disclosure, or document as soon as administratively practicable under the circumstances. Good faith acts include use of electronic alternative means of communicating with plan participants and beneficiaries who the plan fiduciary reasonably believes have effective access to electronic means of communication, including email, text messages, and continuous access websites.
For example, if a summary of material modifications (“SMM”) would otherwise be required to be distributed to plan participants by July 28, 2020, it will not be a violation of ERISA to fail to furnish the SMM by July 28, 2020 - as long as the plan and/or plan fiduciary furnish the SMM as soon as administratively practicable - and as long as the plan and plan fiduciary act in good faith – such as by placing the SMM on the employer’s website and/or transmitting the SMM to participants via email or text message if the plan fiduciary believes participants have effective access to email or text messages.[4]
- Guiding fiduciary compliance principles
According to the DOL, the guiding principle for plans must be to act reasonably, prudently, and in the interest of the covered employees and their families who rely on their health, retirement, and other employee benefit plans for their physical and economic wellbeing. Plan fiduciaries should make reasonable accommodations to prevent the loss of benefits or undue delay in benefits payments in such cases and should attempt to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established timeframes.
In addition, the DOL acknowledges that there may be instances when plans and service providers may be unable to achieve full and timely compliance with claims processing and other ERISA requirements. DOL’s approach to enforcement will emphasize compliance assistance and include grace periods and other relief where appropriate, including when physical disruption to a plan or service provider’s principal place of business makes compliance with pre-established timeframes for certain claim decisions or disclosures impossible.
- IRS Form 5500 filing relief
The DOL provides IRS Form 5500 relief, consistent with the relief already provided by the IRS. For example, as of the date of this E-News Alert, an IRS Form 5500 with an original filing deadline or an extended filing deadline falling between April 1, 2020 and July 14, 2020, is now due July 15, 2020.[5]
If you have questions regarding this recent DOL/IRS guidance or the impact of COVID-19 on any of the employee benefit programs your business sponsors, please contact your regular Butzel Long attorney, a member of the Butzel Long Employee Benefits Practice Group, or the author of this e-mail news alert.
Thomas Shaevsky
248.258.7858
shaevsky@buztel.com
Nancy Keppelman
734.213.3433
keppelman@butzel.com
[1] The joint final rule states that it has been reviewed by the U.S. Department of Health and Human Services (“HHS”), which has advised the DOL/IRS that HHS concurs with the relief specified in the joint final rule. HHS has advised the DOL/IRS that HHS will exercise enforcement discretion to adopt a temporary policy of measured enforcement to extend similar timeframes otherwise applicable to non-Federal governmental group health plans and health insurance issuers offering coverage in connection with a group health plan, and their participants, beneficiaries and enrollees under applicable provisions of the Public Health Service Act.
[2] Presumably, the ending of the National Emergency would be announced by formal presidential proclamation or letter. To the extent there are different Outbreak Period end dates for different parts of the country, the DOL/IRS will issue additional guidance regarding the application of the relief provided in the joint final rule. The DOL/IRS reserve the right, in future guidance, to adjust the end date of the Outbreak Period.
However, under statutory rules, any time period to be disregarded cannot be of more than 1 year of duration.
[3] The Notice does not apply to those ERISA provisions over which the Pension Benefit Guaranty Corporation has jurisdiction. The Notice does not extend deadlines for IRS required notices under the Internal Revenue Code.
The Notice primarily pertains to plan loans issued under the recently enacted CARES Act, delayed depositing of participant contributions and loan repayments due to COVID-19, and delayed issuance of blackout notices due to COVID-19. These topics are discussed in another Butzel Long E-News Alert.
[4] This example presumes that July 28, 2020 occurs prior to 60 days after the announced end of the COVID-19 National Emergency.
[5] IRS Form M-1 filings (required for multiple employer welfare arrangements - otherwise known as MEWAs) are provided extended filing relief for the same period of time as the IRS Form 5500 filing relief.
