Late on February 26, the Department of Labor (DOL) issued much anticipated guidance in the form of EBSA Disaster Relief Notice 2021-01. The main change affecting the operation of certain health and welfare plans, described below, is that the DOL has clarified that the one-year statutory limitation for disregarding plan deadlines will apply on an individual basis.
When the COVID-19 pandemic began last spring, the Departments of Labor and Treasury (together, the “Departments”) issued guidance extending certain deadlines related to retirement, health and welfare plans. Pursuant to this guidance health and retirement plans subject to ERISA must disregard the Outbreak Period (i.e., March 1, 2020 through 60 days after the announced end of the COVID-19 national emergency) when determining the following deadlines:
- 30-day timeframe for a participant to elect HIPAA special enrollment;
- 60-day timeframe for a participant to elect CHIPRA special enrollment;
- 60-day timeframe for a participant to elect COBRA continuation coverage;
- Timeframe for a participant to timely pay COBRA premiums;
- Timeframe for a participant to notify plan of a qualifying event or disability determination;
- Timeframe for a participant to file claims, appeals, and requests for external review; and
- Timeframe for the plan to provide a COBRA election notice.
At this time, the national emergency is expected to continue for at least a few more months. However, ERISA and the Code expressly limit the Departments’ ability to disregard deadlines to one year. Because the Outbreak Period extensions were first effective as of March 1, 2020, it seemed that the Outbreak Period would end February 28, 2021, absent further guidance from the Departments.
EBSA Disaster Relief Notice 2021-01
In light of the one-year statutory limitation for disregarding plan deadlines, the DOL clarified that, while the Outbreak Period must continue to be disregarded until 60 days after the national emergency has ended, a one-year limit will apply on an individual-by-individual basis. Effectively, the extended deadline for each individual will end upon the earlier of (i) one year or (ii) the end of the Outbreak Period. At that time, the clock for the applicable deadline will begin running for that individual. For example, if the participant experienced a HIPAA special enrollment event on February 2, 2021, the participant will be permitted to make the special enrollment election through March 2, 2022 (assuming the Outbreak Period does not end before then), which is the 30th day following the end of the disregarded period.
The DOL advises plan administrators and fiduciaries to exercise caution before denying an individual a benefit or right based on a failure to take action by the applicable plan deadline. Specifically, the DOL states that acting reasonably, prudently, and in the best interest of employees and their families may require a plan to make reasonable accommodations to prevent the loss of or undue delay in payment of benefits.
Plan sponsors should now be considering the types of notices or announcements that will be necessary to inform participants about how the extended deadlines may apply to them and their situation. In addition, plan sponsors should consider whether any prior notices need to be reissued or amended or whether supplemental plan amendments are needed to account for these clarifications.