On April 28, 2020, the U.S. Department of Labor (DOL) and the Internal Revenue Service issued a new final rule and additional guidance that together extend numerous deadlines under ERISA and the Internal Revenue Code (Code) that apply to group health plans, retirement plans, and participants in those plans (Extension Guidance). The extensions, which are being enacted in response to the COVID-19 pandemic and pursuant to the authority granted to the DOL by the CARES Act, promise to have a significant impact on employers’ administration of various benefit plan requirements, such as administration of benefit plan claims and appeals, COBRA continuation coverage and mid-year special enrollment in group health plan coverage.
Here are a few highlights of the Extension Guidance:
- The Outbreak Period. All benefit plan deadlines that are identified in the Extension Guidance are effectively tolled during the “Outbreak Period” defined in the guidance. The Outbreak Period starts March 1, 2020, and ends 60 days after the announced end of the COVID-19 National Emergency. As an example, if the National Emergency ends on May 15, 2020, the Outbreak Period will end on July 14, 2020.
- Benefit Plan Deadlines. Deadlines for the following benefit plan actions are impacted by the Extension Guidance:
- Requesting special enrollment in a group health plan. (ERISA 701(f); Code 9801(f))
- Providing the COBRA election notice to COBRA-qualifying beneficiaries. (ERISA 606(c); Code 4980B(f)(6)(D))
- Electing COBRA continuation coverage. (ERISA 605; Code 4980B(f)(5))
- Making COBRA premium payments. (ERISA 602(C); ERISA 603; Code 4980B(f)(2)(B)(iii); Code 4980B(f)(2)(C))
- Notifying the plan of a COBRA-qualifying event or a determination of Social Security disability for COBRA purposes. (ERISA 606(a)(3); Code 4980B(f)(6)(C))
- Filing a benefit claim or an appeal of an adverse benefit determination under the plan’s claims and appeals procedures. (29 CFR 2560.503-1)
- Requesting external review of an adverse benefit determination or final internal adverse benefit determination under a medical plan. (29 CFR 2590.715-2719(d)(2)(i); 26 CFR 54.9815-2719(d)(2)(i))
- Filing information to perfect a request for external review. (29 CFR 2590.715-2719(d)(2)(ii); 26 CFR 54.9815-2719(d)(2)(ii))
- The Extension Guidance includes some examples that offer a glimpse into how the Outbreak Period will impact benefit plan administration. Here are two examples, using an assumed Outbreak Period of March 1, 2020 – July 14, 2020:
- COBRA-Qualifying Event – Participant Election. An employee whose hours are reduced during the Outbreak Period and has a COBRA-qualifying event will have until September 12, 2020 (60 days after the last day of the Outbreak Period) to elect COBRA continuation coverage.
- Disability Plan Appeal Request. An employee who receives a disability plan claim denial decision during the Outbreak Period will have until at least January 10, 2021 (180 days after the last day of the Outbreak Period) to file an appeal of the claim denial. If the disability plan provides for a longer period than 180 days to file appeal requests, the deadline will be later (e., the plan’s internal deadline will begin to run on the last day of the Outbreak Period).
The implications of the Extension Guidance are far-reaching. Employers will need to consider how the extensions affect many routine benefit administration practices, such as whether a participant’s health plan claims are pended during the participant’s COBRA election period and how the employer’s health plan collects COBRA premiums. Faegre Drinker is continuing to review the Extension Guidance and will provide additional considerations for employee benefit plan sponsors in future client alerts.