Benefit News
Certain Benefit Timeframes Extended Due To Covid-19
April 30, 2020
On April 28, 2020, the Department of Labor (DOL) and the Internal Revenue Service (IRS) (collectively, the Departments) announced that certain timeframes under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (Code) will be extended for employee benefit plans, plan participants and plan service providers impacted by the COVID-19 outbreak.
A final rule was released by the Departments and is available here. In addition, the DOL released a related Disaster Relief Notice 2020-01 to extend the time for plan sponsors and administrators to furnish benefit statements, annual funding notices, and other notices and disclosures required under ERISA if they make a good faith effort to provide the documents as soon as administratively practicable, as well as a new set of Frequently Asked Questions (FAQs) to help plan participants and employers impacted by the COVID-19 outbreak understand their rights and responsibilities under ERISA.
Plan sponsors of non-federal governmental plans and state agencies are encouraged to adopt similar rules that may be applicable to their group plans and their participants and beneficiaries.
Summary Of Relief Under Final Rule
In general, all employee welfare benefit plans must disregard the period between March 1, 2020 through the end of the “outbreak period” (date that is 60 days from the announced end of the COVID-19 national emergency period), in determining compliance deadlines for certain notification requirements:
- HIPAA special enrollment events. Employees are otherwise required to provide plan sponsors a minimum 30-day notice of the occurrence of a HIPAA special enrollment event on account of marriage, birth, adoption/placement for adoption, or gain/loss of other group health coverage (60 days for the Children’s Health insurance Program, or CHIP special enrollment events). These deadlines have been extended, accordingly, to disregard the outbreak period.
- Note: With the exception of birth or adoption, where coverage can be made effective retroactively to the date of the event as long as the employee pays the premiums, the general rule is that coverage changes as a result of a special enrollment event become effective as soon as administratively practicable upon being notified of the event.
- Example: An eligible employee who previously declined coverage gives birth on March 31, 2020. Assuming an April 29,2020 end date for the COVID-19 national emergency, the outbreak period would run for an additional 60 days (through June 29, 2020), and the employee would have until July 29, 2020 (30 days after the end of the outbreak period) to exercise her special enrollment rights to enroll her child and her self, provided she pays the premiums for any period of coverage.
- COBRA notification requirements. The timelines for several COBRA notification requirements have been extended, including the 60-day period for a COBRA qualified beneficiary to elect continuation coverage, the deadline for a qualified beneficiary to provide notice of a COBRA qualifying event, as well as the time periods applicable for COBRA participants to make premium payments and continue their COBRA continuation coverage. The timeframes for plan sponsors and plan administrators to provide a COBRA election notice has also been extended.
- Example: An individual who lost coverage due to a reduction of hours as a result of the COVID-19 emergency is given a COBRA election notice on April 1, 2020. If the national emergency ends on April 29, 2020, the individual will have until August 28, 2020 (60 days following the end of the outbreak period) to elect COBRA.
- Filing a benefit claim or appeal. ERISA’s timelines for filing a benefit claim or an appeal of a benefit denial have also been extended, as well as the timeline in which a claimant may request an external review.
- Example: A participant filed a benefit claim on April 1, 2021 for medical services that were incurred on March 1, 2020. Under the terms of the participant’s health plan, benefit claims must be filed within 365 days of receiving treatment. If the national emergency ended on April 29, 2020, the individual’s last day to submit a claim would be June 29, 2021 (365 days from June 29, 2020, the end of the outbreak period).
Additional examples on applying the extensions are provided in the guidance.
The Departments will continue monitoring the effects of the COVID-19 pandemic and have reserved the right to provide additional relief, if warranted.
Ebsa Disaster Relief Notice 2020-01
The DOL also separately announced an extension of deadlines for plan sponsors and fiduciaries to provide certain other ERISA required notices or disclosures to plan participants and beneficiaries that were required to have been furnished between March 1, 2020 and the end of the outbreak period. Relief is contingent upon making a good faith effort to provide the documents as soon as administratively practicable. The Notice explains that good faith acts include use of electronic means of communicating with plan participants who the plan sponsor reasonably believes have effective access to electronic means of communication, including email, text messages and continuous access websites.
This guidance is mainly directed to retirement plan disclosure obligations, including with respect to the following:
- Certain failures by a plan administrator to adhere to procedural requirements under the terms of the plan document for plan loans and distributions.
- Plan loan issuance and repayment obligations applicable to the CARES Act.
- Plan amendments related to the CARES Act provisions.
- Temporary delays in forwarding participant contributions and loan repayments to pension benefit plans.
- Blackout period notices.
In addition, the DOL emphasizes general fiduciary compliance considerations for plans to act reasonably, prudently, and in the interest of plan participants and beneficiaries. Plan fiduciaries should make reasonable accommodations to prevent the loss of benefits or undue delay in benefit payments and should attempt to minimize potential losses of benefits resulting from not being able to comply with pre-established timeframes.
The DOL also 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. The DOL’s approach to enforcement will be to provide 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 claims’ decisions or disclosures impossible.
For additional information, please contact your Burnham Benefits Consultant or Burnham Benefits at 949-833-2983 or inquiries@burnhambenefits.com.
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