Last year the IRS and Department of Labor (DOL) extended various ERISA and COBRA deadlines for employee benefit plan participants affected by COVID-19. The extended deadlines included:
- The timeframe to elect COBRA continued health coverage;
- The deadline for making COBRA premium payments;
- Requests for special enrollment in a group health plan under HIPAA;
- The deadline for filing ERISA benefit claims and appeals; and
- The deadline for employers to provide certain plan-related notices and disclosures.
This relief began March 1, 2020, and was to end 60 days after the government’s announcement of the end of the COVID-19 National Emergency (the “Outbreak Period”). One year later, the COVID-19 National Emergency is still in place, so the Outbreak Period is still in effect.
This guidance did not seem to contemplate provisions in ERISA (Section 518) and the Tax Code (Section 7508A(b)) providing that, in the case of a Presidentially-declared disaster, the IRS and DOL may provide for an extension/tolling period of up to one year that may be disregarded in determining the date required benefit plan actions must be taken.
Employers and plan administrators have been struggling to reconcile the application of the specific COVID extensions (without a one-year limit) with the one-year extensions in ERISA and the Tax Code for Presidentially-declared disasters. Because of this uncertainty, many believed that the COVID Outbreak Period would automatically end, and the deadlines reinstated, on March 1, 2021.
In just-released guidance, EBSA Disaster Relief Notice 2021-01 clarifies that the one-year limit applies to the COVID-related extensions and further provides that it will be applied on an individual-by-individual basis. This means that participants and plans with deadlines eligible for the relief will have the applicable time periods disregarded until the earlier of one year from the date they were first eligible for relief or 60 days after the announced end of the National Emergency. On the applicable date, the timeframes for individuals and plans with periods that were previously disregarded will resume.
In all cases, the permitted tolling for plan actions cannot exceed one year. The first date a participant or plan could be eligible for relief was March 1, 2020, the first day of the National Emergency. Therefore, the earliest date that a disregarded period can begin to run again is March 1, 2021.
The guidance also requires employers and benefits administrators to track applicable deadlines on a participant-by-participant basis, which is more administratively burdensome than a uniform extension period. Each participant has his or her own rolling deadline from the date of his or her event.
- If participant Joe had to make a COBRA election by March 1, 2020, that requirement is extended to March 1, 2021.
- If participant Mary had to make a COBRA election by March 1, 2021, that requirement is extended to March 1, 2022.
- If a benefit plan had to provide a notice or disclosure to participants by March 1, 2020, the responsible plan fiduciary would need to furnish the notice by March 1, 2021.
This individualized application of the one-year extension was not contemplated when the original extensions were issued last year. Therefore, employees should work with their benefits administrators to communicate the new deadlines to affected participants and update benefit plan communications, COBRA material, and HIPAA special enrollment notices.
Please contact Vandeventer Black LLP if you have any questions or would like additional information on these issues.