You may recall that late last spring, the DOL and IRS issued extensions of time for certain participant and employer deadlines under COBRA, HIPAA, and ERISA. See our original blog post here. The rule provided that the period from March 1, 2020, through 60 days after the announced end of the COVID-19 national emergency, known as the “outbreak period,” must be disregarded for purposes of many plan and participant deadlines. At the time, no one contemplated that the pandemic would last this long and at issue is the fact that the agencies only had the statutory authority to grant extensions for up to one year. This left all of us in the benefits community wondering whether the extensions would all just end on February 28, 2021? The DOL answered the question for us on Friday morning in EBSA Disaster Relief Notice 2021-01.
While this guidance is welcome, it is not without its administrative challenges. The new guidance states that extensions of time will not automatically end on February 28, 2021, for everyone, but that the one-year statutory relief will be applied on a participant by participant basis. And, we all thought the original guidance was confusing! Under the new guidance, a participant’s relief for purposes of actions such as COBRA election or payment for example, will end as of the EARLIER of: (i) one year from the date the individual was first eligible for relief; or (ii) 60 days after the announced end of the National Emergency. The relief end date is applied in the same fashion to a plan sponsor for purposes of providing notices to plan participants. In no event will the relief granted extend beyond 1 year. Fortunately, there are some helpful examples in the guidance:
· 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).
· 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.
· If a plan would have been required to furnish a notice or disclosure by March 1, 2020, the relief under the Notices would end with respect to that notice or disclosure on February 28, 2021. The responsible plan fiduciary would be required to ensure that the notice or disclosure was furnished on or before March 1, 2021.
In the guidance, the DOL recognizes that employers and participants may continue to face any number of challenges due to the ongoing nature of the pandemic and reminds that, “The guiding principle for administering employee benefit plans is to act reasonably, prudently, and in the interest of the workers and their families who rely on their health, retirement, and other employee benefit plans for their physical and economic well-being. This means that plan fiduciaries should make reasonable accommodations to prevent the loss of or undue delay in payment of benefits in such cases and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames.”
The DOL also suggests providing notification to plan participants in the following circumstances:
· Sending notice to individuals regarding the end of the relief period if the plan administrator should reasonably know that the end of the relief period for an individual action is exposing a participant or beneficiary to a risk of losing protections, benefits, or rights under the plan
· Providing reissued or amended notices if original disclosures failed to provide accurate information regarding the time in which participants and beneficiaries were required to take action
· Notifying participants and beneficiaries who are losing coverage under their group health plans that other coverage options may be available to them, including the opportunity to obtain coverage through the Health Insurance Marketplace
As with the previous guidance, this new guidance will take some time to understand. In addition to providing additional notices, employers, third party administrators, and COBRA administrators may need to adjust their administrative practices. We will continue to communicate the impacts of this guidance as we learn more.
Please contact your HORAN representatives for additional information.
The information contained in this document is informational only and is not intended as, nor should it be construed as, legal or accounting advice. Neither HORAN nor its consultants provide legal, tax nor accounting advice of any kind. We make no legal representation, nor do we take legal responsibility of any kind regarding regulatory compliance. Please consult your counsel for a definitive interpretation of current statute and regulation, and their impact on you and your organization.