The US Department of Labor, in conjunction with the Internal Revenue Service and US Department of the Treasury, issued guidance and deadline extensions applicable to ERISA-governed group health and welfare plans. The guidance provides relief for plan sponsors, plan administrators and plan participants that may be struggling to comply with applicable deadlines and requirements in the midst of the chaos related to the COVID-19 pandemic.

IN DEPTH

The US Department of Labor (DOL), in conjunction with the Internal Revenue Service (IRS) and US Department of the Treasury, has issued guidance and deadline extensions applicable to group health and welfare plans governed by the Employee Retirement Income Security Act of 1974, as amended (ERISA) (collectively, COVID-19 guidance). This guidance includes a temporary expansion of plans’ ability to use forms of electronic disclosure, and also contains relief applicable to retirement plan sponsors and beneficiaries.

To ease the impact of the Coronavirus (COVID-19) pandemic, the Coronavirus Aid, Relief, and Economic Security Act amended Section 518 of ERISA to expressly empower the DOL with discretion to extend any action required or permitted by ERISA for up to one year. The COVID-19 guidance is detailed in two documents providing relief to plan administrators and plan participants with respect to certain deadlines and notice requirements for health and welfare plans: EBSA Disaster Relief Notice 2020-01 and Department of Labor, Internal Revenue Service, and Treasury Department Joint Notice. The COVID-19 guidance modifies the timing requirements for certain health and welfare plan notices and actions to effectively disregard the outbreak period, which is defined as the period between March 1, 2020, (the beginning of the COVID-19 national emergency declared by the president) and 60 days after the announcement of the end of the COVID-19 national emergency (or such other date announced by the DOL in a future notice).

Relief for Group Health Plans, Plan Participants, Beneficiaries, Qualified Beneficiaries and Claimants

The COVID-19 guidance states that group health plans, disability plans and other employee welfare benefit plans must disregard the outbreak period in determining the following periods or dates:

• The 30-day period (or 60-day period, if applicable) to request HIPAA special enrollment

• The 60-day election period for COBRA continuation coverage

• The date for making COBRA premium payments

• The date for individuals to notify the plan of certain qualifying events (divorce, dependent child aging out of plan coverage) or determination of disability as it relates to COBRA coverage

• The date within which individuals may file a benefit claim under a plan’s claims procedure

• The date within which claimants may file an appeal of an adverse benefit determination under a plan’s claims procedure

• The date within which claimants may file a request for an external review after receipt of an adverse benefit determination or final internal adverse benefit determination

• The date within which a claimant may file information to perfect a request for external review upon an incomplete initial request

• For group health plan sponsors and administrators, the date for providing a COBRA election notice (typically within 14 days after the plan receives notice of a qualifying event).

Some of the relief outlined above may require revisions to participant notices and communications. For example, the COBRA election notice is required to include an explanation of how to elect COBRA coverage and the deadlines for making such election. The extended notice timing described above, which takes into account the outbreak period, would appear to affect this content requirement. More guidance on satisfying the content requirements applicable to all affected notices would be welcome, particularly as it may help protect plan sponsors against the ongoing threat of participant lawsuits alleging deficient notices.

The COVID-19 guidance contains the following examples using April 30, 2020, as the assumed end date of the COVID-19 national emergency. Unfortunately, it is unknown when the COVID-19 national emergency will end, so plan sponsors should check with counsel before reverting back to shorter pre-pandemic timeframes.

Special Enrollment: Emma previously declined coverage in her employer-sponsored group plan (for which she was otherwise eligible). Emma gave birth on March 31, 2020, and would like to enroll herself and her child in her employer’s plan, but open enrollment does not begin until November 15, 2020. Assuming the COVID-19 national emergency ends on April 30, 2020, Emma and her child qualify for special enrollment as of March 31, 2020, with Emma able to exercise her special enrollment rights until July 29, 2020 (30 days following the 60th day after the ending of the COVID-19 national emergency).

COBRA Election Notice: John experiences a qualifying event for COBRA purposes as a result of a reduction of hours below the hours necessary to meet the group health plan’s eligibility requirements and has no other coverage. He is provided a COBRA notice on April 1, 2020. Assuming the COVID-19 national emergency ends on April 30, 2020, John has until August 28, 2020, to elect COBRA coverage (60 days following the 60th day after the ending of the COVID-19 national emergency).

COBRA Payments: More than 45 days have passed since Sally elected COBRA continuation coverage, and monthly premium payments are due by the first of the month. Sally made a timely February payment for her COBRA coverage but did not make payments on March 1, 2020; April 1, 2020; May 1, 2020; or June 1, 2020. Sally’s plan does not permit qualified beneficiaries longer than the 30-day grace period for making premium payments. Assuming the COVID-19 national emergency ends on April 30, 2020, Sally has until July 29, 2020, to pay the March-June COBRA premiums payments (30 days following the 60th day after the ending of the COVID-19 national emergency). However, if she does not make the payments for the four missed months by July 29, 2020, the plan would not be obligated to cover benefits or services that occurred during such months.

Filing a Benefit Claim: On March 1, 2020, Danielle received medical treatment for a condition covered under her employer’s group health plan. Under her plan, claims must be submitted within 365 days of the participant’s medical treatment. Assuming the COVID-19 national emergency ends on April 30, 2020, Danielle has until July 29, 2021, to submit her claim (365 days following the 60th day after the ending of the COVID-19 national emergency).

Appealing an Adverse Benefit Determination: Leonard received a notification of an adverse benefit determination from his disability plan on January 28, 2020, noting that he has 180 days to file an appeal. Assuming the COVID-19 national emergency ends on April 30, 2020, Leonard has until November 24, 2020, to file an appeal (148 days after the 60th after the ending of the COVID-19 national emergency [180-32 days between January 28 and March 1, 2020]).

The DOL also released additional FAQ guidance for participants and beneficiaries to address the new relief and other common health and retirement plan questions: COVID-19 FAQs for Participants and Beneficiaries.

Form 5500 and M-1 Filing Relief

Welfare plans subject to ERISA generally must file a Form 5500 with the DOL by the end of the seventh month after the end of the plan year (for calendar-year plans, July 31 of the following year). The COVID-19 guidance confirms previous relief providing an extension by which any Form 5500 filing that would otherwise be due between April 1 and July 15, 2020, is now automatically due by July 15, 2020, without the need to request an extension. Additionally, the regular two-and-one-half month extension is also available by filing a Form 5558, but this extension is still measured using the original due date instead of July 15. Finally, this automatic extension also applies if a sponsor previously filed an extension request using Form 5558 and that extension falls within the April 1 to July 15 relief period. For a calendar-year plan, the 2019 Form 5500 will be due by July 31, 2020, which is outside the relief period. M-1 filing relief extends for the same period of time as the Form 5500 relief.

ERISA-Required Communications and Electronic Disclosure

The COVID-19 guidance states that the Employee Benefits Security Administration (EBSA) will not hold a benefit plan and/or plan fiduciary in violation of ERISA for failure to timely furnish any required notice, disclosure or document during the outbreak period, provided that the fiduciary acts in good faith and furnishes the communication as soon as practicable. For example, this relief would extend to the provision of summary plan descriptions, summaries of material modifications, and notices of adverse benefit determinations and appeals. EBSA states that “good faith acts” include use of alternative electronic means of communicating with participants and beneficiaries if the fiduciary reasonably believes they have effective access to those means, such as email, text messaging and continuous access websites.

Next Steps

The recent guidance issued by the DOL, IRS and the Treasury reflects the agencies’ acknowledgement that plan sponsors, plan administrators and plan participants may be struggling to comply with all applicable deadlines and requirements for health and welfare plans in the midst of the chaos related to the COVID-19 pandemic. Plan sponsors and administrators should consult with their third-party administrators, insurance providers and legal advisors to confirm that the COVID-19 guidance is incorporated into existing plan policies, procedures, participant notices and applicable plan documents.