Last spring, in response to the COVID-19 emergency, the DOL and IRS provided joint guidelines (the “Notice”) extending certain deadlines for employee benefit plans, including deadlines to elect COBRA, pay COBRA premiums, and provide COBRA election notices, as well as elect HIPAA special enrollment, file a claim or appeal for benefits, and request an external review of a denied claim (the “Plan Deadlines”).
The 2020 guidance stated that the Plan Deadlines would be suspended beginning March 1, 2020, and continuing until the sixtieth day after the end of the COVID-19 National Emergency. The deadline suspensions provided by that Notice were limited by statute to one year, however, and were generally expected to expire on February 28, 2021, at the latest. However, as that expiration date approached, the DOL issued Notice 2021-01, which provided for additional suspensions of Plan Deadlines on an individualized basis.
Under Notice 2021-01, the DOL directs that Plan Deadlines should continue to be suspended until the earlier of (1) one year from the date an individual was first eligible for relief, or (2) 60 days after the announced end of the National Emergency (the “Rolling Outbreak Period”). Consequently, Plan Deadlines with action periods that did not commence on or before March 1, 2020, will be afforded the same relief as initially tolled Plan Deadlines, meaning that (1) tolling will not universally end on February 28, 2021, and (2) employers will need to determine Rolling Outbreak Periods for each respective Plan Deadline for which tolling did not commence until after March 1, 2020. Below are some tips to help employers determine new Plan Deadlines.
How to treat the 60-day wind-down period
Because the end of the National Emergency has not yet been declared, the Rolling Outbreak Periods remain in effect, and the 60-day wind-down period does not currently apply to any suspended Plan Deadlines. Only the statutory one-year limitation applies. Accordingly, if any suspended deadline has not yet reached the one-year limit when the end of the National Emergency is announced, employers will need to apply all or a portion of the 60-day wind-down period at that time. For example, if the end of the National Emergency is announced on June 1, 2021, a deadline that had been suspended since September 1, 2020 (and therefore had not reached the one-year expiration date) would continue to be suspended through July 31, 2021, which would be 60 days after the end of the National Emergency was announced. However, if the end of the National Emergency is not announced until October 1, 2021, the September 1, 2020, deadline extension would end on September 1, 2021, because it cannot be extended beyond that one-year anniversary.
How to determine the new deadlines for Plan Deadlines that were tolled as of March 1, 2020
Although the 60-day wind-down period does not currently apply, any Plan Deadlines that were tolled by the prior notice on March 1, 2020, must now be restarted. This means that any time remaining on a participant’s action period prior to suspension of the Plan Deadlines on March 1, 2020, will be provided to employees beginning on March 1, 2021. For example, if an employee had a new baby on February 15, 2020, only 15 of the employee’s 30 days to add the child to their coverage would have lapsed as of March 1, 2020. Since the Plan Deadline is restarted for this employee on March 1, 2021, the employee has only the remaining 15 days of their original election period to add the child, which will expire on March 16, 2021.
How to determine the new deadline for Plan Deadlines whose action period began on or after March 1, 2020
Plan Deadlines whose action period commenced (and deadlines were set) after March 1, 2020, but immediately began to be tolled as a result of the Rolling Outbreak Period, will be afforded the same length of relief as actions commenced prior to March 1, 2020. For example, if a qualified beneficiary would have been required to make a COBRA election by March 1, 2021, the Rolling Outbreak Period will delay that election requirement until the earlier of either (1) one year from that date (that is, March 1, 2022) or (2) 60 days following the end of the National Emergency. In this example, if the end of the National Emergency is announced on June 1, 2021, the employee’s COBRA election action period will begin to run 60 days thereafter. The 60-day wind-down period and tolled action days may only be provided up to the statutorily permitted one-year limit.
Employee communications
The DOL notice includes a reminder that plan administrators and other responsible fiduciaries might have communication obligations with respect to any relief periods that are now ending for any individuals. Specifically, if an individual is at risk of losing protections or benefits under the plan due to the expiration of the maximum one-year suspension limit, the fiduciaries are urged to continue notifying those affected individuals. In addition, employers should review any prior communications regarding the suspension of the deadlines under the prior 2020 notice to ensure that the information previously provided remains accurate.
Due to the uncertainty contained in the original notice regarding the one-year limitation, as well as the changes made by the 2021 notice, employers should consider providing an updated communication to their employees regarding these deadline extensions as soon as administratively practicable. In addition, the DOL guidance generally warns that plan fiduciaries should make reasonable accommodations to prevent the loss of or the undue delay in payment of benefits, because any delay in communication of these changes could result in a fiduciary obligation to suspend deadlines further to the extent that employees and affected individuals were not fully made aware of the expiration of existing deadline suspensions.
Client Alert 2021-067
