April 18, 2021

Volume XI, Number 108

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April 16, 2021

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We Now Know For Whom the Statute Tolls

In our February 12th blog post, we raised the question of how to interpret the duration of the DOL/Treasury relief tolling certain benefit plan deadlines  due to the COVID-19 pandemic. Without guidance from the agencies, it was unclear whether the relief was set to expire in a few days (on February 28, 2021) due to a one-year tolling limit in ERISA and the Internal Revenue Code, or whether it would continue for a longer period. Now we have our answer.

In EBSA Disaster Relief Notice 2021-01, the DOL explains that the one-year tolling period will be applied on an individual-by-individual basis, meaning that a deadline will be tolled until the earlier of (i) one year from the date the individual was first eligible for the relief, or (ii) the end of the Outbreak Period (i.e., 60 days after the announced end of the National Emergency, which is ongoing).  This means that every plan participant and beneficiary who was subject to a deadline that expired March 1, 2020 or later will have until the one-year anniversary of that deadline to take the required action (i.e., elect or pay for COBRA coverage, exercise a special enrollment right, or file a claim or appeal), unless the Outbreak Period ends sooner. Somewhat unexpectedly, this includes individuals who have a deadline that expires after February 28, 2021.

What to do now? Plans need to consider the types of notices and/or announcements they should make to participants and beneficiaries, and whether those notices can be general in nature or need to be more individualized. In this regard, the DOL suggests that plans should consider affirmatively sending a notice regarding the end of the relief period if it knows or has reason to know that an individual’s relief period is ending. Plans also should review the notices they sent when this began, as the notices likely will need to be updated depending on how they were worded. Interestingly, the DOL Notice goes a step further by suggesting that plans consider ways to ensure that participants and beneficiaries who are losing group health coverage are aware of other options that may be available, such as Marketplace coverage, particularly in light of new special enrollment opportunities in certain states.

While the agencies’ position may be unwelcome news for some who expected the administrative burdens of tolling to end at the end of the one-year period on February 28,2021, it is not entirely unexpected. The DOL reiterates that, in light of the ongoing issues caused by the pandemic, plans should be administered in a reasonable manner taking into account the difficulties facing individuals due to the pandemic and the fact that they rely on the plans’ benefits for their well-being. With this guidance in mind, plan administrators should exercise caution and provide appropriate notice before denying an individual a benefit or right based on a failure to take action within the applicable timeframes.

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© 2021 Proskauer Rose LLP. National Law Review, Volume XI, Number 57
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About this Author

Paul Hamburger Employee Benefits Law Attorney Proskauer Rose Law Firm
Partner

Paul M. Hamburger is co-chair of the Employee Benefits & Executive Compensation Group and head of the Washington, DC office. Paul is also a leader of the Practice Center’s health and welfare subgroup and a member of Proskauer’s Health Care Reform Task Force.

Paul provides technical knowledge and advice to employers on all aspects of their employee benefit programs, and advises employee benefit plan trustees and service providers on ERISA and employee benefit plan-related matters. He has extensive experience in negotiating service provider...

202.416.5850
Roberta K Chevlowe, Labor, Employment, Attorney, Proskauer, Law Firm
Senior Counsel

Roberta Karen Chevlowe, a Senior Counsel in the Labor & Employment Law Department, practices in the field of employee benefits law. Roberta counsels employers and other benefit plan sponsors with regard to a broad spectrum of issues relating to the establishment, administration and continued legal compliance of all types of employee benefit plans. She advises clients regularly with regard to ERISA’s reporting and disclosure requirements and fiduciary duty provisions; health care reform compliance; COBRA administration; plan qualification issues arising under the Internal Revenue Code;...

212-969-3949
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