DOL Guidance Clarifies Expiration of COVID-19 Deadline Extension for Employee Benefit Plans
The U.S. Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) published EBSA Disaster Relief Notice 2021-01 in the nick of time on February 26, 2021. EBSA Disaster Relief Notice 2021-01 was released just two days before the date that certain benefit plan deadline extensions were potentially expiring. The DOL and the Internal Revenue Service (IRS) issued joint guidance on May 4, 2020, which provided that certain employee benefit plan deadlines for participants would be tolled or suspended during the COVID-19 “Outbreak Period,” which began on March 1, 2020, and which ends 60 days after the end of the COVID-19 national emergency. Certain deadlines applying to plan administrators were also tolled last year as set forth in EBSA Disaster Relief Notice 2020-01.
Importantly, the statutory authority granted to the IRS and DOL permits a maximum one-year extension of the deadline for certain actions that are required to be taken with respect to employee benefit plans. Because of that deadline, employers and plans were facing uncertainty as to whether all “clocks” began to run again on March 1, 2021, or if the one-year limitation applied separately to each individually extended deadline. In EBSA Disaster Relief Notice 2021-01, the DOL takes the latter position—that the maximum one-year suspension applies individually to each extended deadline. Deadlines that are suspended during the Outbreak Period (for a maximum of one year) include the special enrollment period in group health plans, various deadlines related to COBRA continuation coverage, and several others.
EBSA Disaster Relief Notice 2021-01 clarifies that for deadlines extended under the joint agency guidance and EBSA Disaster Relief Notice 2020-01, the deadline by which an action must be taken will be tolled “until the earlier of: (a) 1 year from the date [the individual or plan was] first eligible for relief, or (b) 60 days after the announced end of the National Emergency.” Below are two examples that help explain the DOL’s position. The examples assume that the announced end of the national emergency is August 31, 2021, in which case the Outbreak Period ends 60 days later, on October 30, 2021.
Individual with a triggering event earlier than March 1, 2020. Individual A was provided with a COBRA election notice on February 1, 2020. His COBRA election timeframe relief began March 1, 2020, after his election window had already run for 29 days. The deadline will be tolled for one year and will start running again on March 1, 2021, which is earlier than the end of the Outbreak Period. He will have 31 days (60 minus 29), or until April 1, 2021, to elect COBRA coverage.
Individual with a triggering event between March 1, 2020, and March 1, 2021. Individual B was provided with a COBRA election notice on December 1, 2020, and her deadline was immediately tolled beginning that day. One year from her initial relief date is December 1, 2021. The end of the Outbreak Period is October 30, 2021. Because October 30, 2021, is the earlier date, the individual’s clock will start ticking on that date. Her 60-day COBRA election window will end on December 29, 2021.
The IRS also indicated in informal conversations that individuals will continue to be entitled to regulatory relief as long as they experience a deadline-triggering event during the national emergency period, even if the event occurs on March 1, 2021, or later. However, neither the IRS nor DOL has provided guidance on whether individuals will be entitled to relief if they experience a deadline-triggering event during the 60 days following the end of the national emergency. The following example continues to assume an August 31, 2021, announced end of the national emergency (and resulting October 30, 2021, end of the Outbreak Period).
- Individual with a triggering event after March 1, 2020, and during the national emergency. Individual C experiences a Health Insurance Portability and Accountability Act (HIPAA) special enrollment event on August 30, 2021, the day before the end of the national emergency. Her special enrollment window is tolled until October 30, 2021, the end of the Outbreak Period. The deadline for her to enroll in her employer’s group health plan will be November 29, 2021.
Another issue that employers may want to consider regards COBRA premium payments for individuals electing COBRA after the normal election deadline. It is not clear from EBSA Disaster Relief Notice 2021-01 whether an individual’s initial COBRA premium payment would be due 45 days after the individual’s COBRA election is made or whether the initial COBRA premium payment (which would also include make-up payments to bring the individual current on his or her payments) due date is then also extended by up to one year under the joint agency guidance and EBSA Disaster Relief Notice 2021-01. Absent additional guidance, employers and plan sponsors may want to give the individual additional time up to one year, unless the Outbreak Period ends earlier, from the initial COBRA premium deadline to make those payments.
EBSA Disaster Relief Notice 2021-01 reminds employers that “[t]he guiding principle for administering employee benefit plans is to act reasonably, prudently, and in the interest” of plan participants and beneficiaries. While stopping short of requiring plans and plan fiduciaries to take certain actions, EBSA Disaster Relief Notice 2021-01 emphasizes the importance of plans and plan fiduciaries putting participants on notice that certain deadlines are expiring. This is particularly of concern if prior notices (e.g., COBRA election notices) had inaccurate information regarding the deadline by which certain action needed to be taken. Because some “clocks” have already restarted (as of March 1, 2021), employers, plans, and plan fiduciaries may consider sending communications targeted to participants who have upcoming deadlines. Such notices could also include information about other coverage options that may be available to participants or beneficiaries who are at risk of losing coverage, including coverage through the Health Insurance Marketplace during the recently reopened special enrollment period under President Joe Biden’s Executive Order 14009, and, for “involuntary” terminations, information about a second COBRA election period and subsidy.