April 18, 2021

Volume XI, Number 108

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April 16, 2021

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COVID-19 Deadline Extensions—Still Relevant to Plan Sponsors?

In May of 2020, the Department of Labor (DOL) and Internal Revenue Service (IRS) released joint-agency guidance that extended several important deadlines for employees, including COBRA election and payment deadlines, HIPAA Special Enrollment deadlines, and claims submission and appeal deadlines.  Under the guidance, plan administrators were required to extend the deadlines that would otherwise apply for any individuals affected between March 1, 2020, until 60 days after the end of the National Emergency (also known as the “Outbreak Period”).  Although the guidance was generally well-received when issued, it has since raised confusion and administrative difficulties due to the length of the Outbreak Period.  Keeping open-ended COBRA election periods without payment of employee premiums has caused administrative difficulties and resulted in varying approaches amongst administrators to ensure plans don’t experience claims risk for periods of now up to 12 months in many cases.

When the guidance was issued, no one imagined that the Outbreak Period would realistically last for more than a year.  Because it is now clear the National Emergency will continue for several more months, the problem that has inadvertently arisen is this extension guidance is now at risk of directly conflicting with statutory guidance under ERISA Section 518 and Code Section 7508A, as amended under the CARES Act to include public health emergencies, like COVID, to the list of circumstances (that previously were comprised of declared disasters, terrorism, and military action, etc.) that allow for up to a one-year extension for applicable deadlines such as those dealt with under the extension guidance above.  This maximum one-year extension for each of the above-referenced deadlines will end on February 28, 2021, however, there has been no direction from the agencies as to how or when plan administrators can reinstitute applicable deadlines.

The agencies know the issue and are evaluating alternatives, but we have been told they likely will not have a solution before February 28, 2021, the end of the maximum statutory one-year extension.  What are employers to do in the meantime?  This is a hotly debated topic amongst employers, attorneys, third-party administrators, and consultants.  Many suggest that employers have no choice but to now enforce the previous deadlines as if the Outbreak Period has ended.  Even that conclusion still leaves open questions, such as does that mean that affected individuals should now be given 60 days from March 1, 2021, to enroll in COBRA and make payments? An additional 30 days to make up all prior COBRA payments deferred for those previously enrolled?

Ultimately, plan sponsors should discuss their next steps with counsel and third-party administrators to weigh all options.  Employers can still rely on the guidance that exists today to support continuing to extend deadlines.  The National Emergency is ongoing and there is good reason to continue to extend all deadlines until further guidance is received.  Even if the DOL and IRS announce an end to the Outbreak Period based on the one-year statutory framework, the agencies typically provide a period of relief for those who in good faith comply with current guidance.  Many are anxiously awaiting directions and we will keep our readers apprised of any developments.

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Jackson Lewis P.C. © 2021National Law Review, Volume XI, Number 56
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About this Author

 Joy M. Napier-Joyce, Employment Benefits Attorney, Jackson Lewis Law Firm, ERISA
Office Managing Principal

Joy M. Napier-Joyce is the Office Managing Principal of the Baltimore, Maryland, office of Jackson Lewis P.C. She also leads the firm’s Employee Benefits Practice Group.

Ms. Napier-Joyce counsels clients in a broad range of benefit matters, including general compliance and administration of qualified retirement plans under ERISA and the Internal Revenue Code. She also assists clients with welfare plan issues involving cafeteria plans, health plans, flexible spending accounts, group insurance products, COBRA and HIPAA. Ms....

410-415-2000
Craig A. Day Employee Benefits Attorney Jackson Lewis Seattle, WA
Principal

Craig A. Day is a Principal in the Seattle, Washington, office of Jackson Lewis P.C. His practice focuses on representing employers in workplace law matters, including preventive advice and counseling.

206-405-0404
Brian M. Johnston, Jackson Lewis Law Firm, Overland Park, Labor and Employment Law Attorney
Principal

Brian M. Johnston is a Principal in the Overland Park and Kansas City offices of Jackson Lewis P.C. He has more than 26 years of dedicated employee benefits experience representing public and private businesses, government entities, third party administrators, and other insurance and retirement service providers on a variety of employee benefit matters. 

Mr. Johnston advises employers and plan sponsors in the implementation and administration of health and welfare plans, including self-funded health benefit plans and other...

913-981-1018
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