DOL Further Extends Participant Deadlines . . . Kind Of
Last Spring, the DOL and IRS issued a Joint Rule that extended a number of participant deadlines under COBRA, HIPAA and ERISA. Under the Joint Rule, plan sponsors had to extend any of deadline that occurred on or after March 1, 2020 until the 60 days following the end of the National Emergency (referred to as the “Outbreak Period”). However, this guidance was issued at time when we had all realized we were going to be dealing with this for more than a few weeks, but nobody contemplated that we would still be under a National Emergency this long.
You may have seen over the past few weeks a lot of chatter that the DOL only has the legal authority to extend deadlines for up to 1 year. With a March 1, 2020 beginning date, that left plan sponsors, insurers, and practitioners wondering whether all of the relief abruptly expired on February 28, 2021. Many law firm and consultant articles were speculating the different options that may occur and what employers should be doing. At the Benefits InSight blog, we were hopeful the DOL would issue something prior to February 28th so we didn’t speculate and our hopes came true this morning.
Just 2 days prior to the anticipated termination date, the DOL issued EBSA Disaster Relief Notice 2021-01. While we are thankful for the guidance, the DOL took the approach that many speculators most feared. The DOL has now confirmed that its interpretation of the ERISA limitation is that the notice periods can be disregarded until the earlier of: (i) 1 year from the date the participant was first eligible for the relief; or (ii) 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 under the Notices will resume. In no case will a disregarded period exceed 1 year.
You read that right! If the delay was not already confusing enough, plan sponsors now have to apply it on a participant-by-participant basis. The DOL gives several helpful examples of how this will work.
- If a qualified beneficiary would have been required to make a COBRA election by March 1, 2020, the Joint Notice delays that requirement until February 28, 2021, which is the earlier of 1 year from March 1, 2020 or the end of the Outbreak Period (which remains ongoing).
- If a qualified beneficiary would have been required to make a COBRA election by March 1, 2021, the Joint Notice delays that election requirement until the earlier of 1 year from that date (i.e., March 1, 2022) or the end of the Outbreak Period.
At the same time last Spring, the DOL also issued EBSA Disaster Relief Notice 2020-1, which provides relief for plan sponsors on certain notice requirements. This new DOL guidance provides that plan sponsor relief also expires after a 1-year period from the date of the relief. Therefore, if a plan would have been required to furnish a notice or disclosure by March 1, 2020, the relief under the Notices would end with respect to that notice or disclosure on February 28, 2021. The responsible plan fiduciary would be required to ensure that the notice or disclosure was furnished on or before March 1, 2021.
There has also been much speculation about what actions plan sponsors need to take to ensure participants know about this relief. In this Notice, the DOL reminds plan sponsors that the guiding principles of ERISA provide that they act reasonably, prudently, and in the interest of the workers and their families who rely on their health, retirement, and other employee benefit plans for their physical and economic well-being. The DOL goes on to state that this may mean where the plan administrator or other responsible plan fiduciary knows, or should reasonably know, that the end of the relief period for an individual action is exposing a participant or beneficiary to a risk of losing protections, benefits, or rights under the plan, the administrator or other fiduciary should consider affirmatively sending a notice regarding the end of the relief period. Moreover, plan disclosures issued prior to or during the pandemic may need to be reissued or amended if such disclosures failed to provide accurate information regarding the time in which participants and beneficiaries were required to take action, e.g., COBRA election notices and claims procedure notices. We are still digesting this guidance as it was issued hours ago to determine best steps for plan sponsors. Please check back for updates or reach out to any Graydon employee benefits attorney with questions.