With the COVID-19 pandemic putting pressure on employers and employees alike, the Department of Labor (“DOL”), Treasury (“Treasury”), and Health and Human Services (“HHS”) (collectively, the “Departments”) continue to issue guidance intended to provide relief for plan participants and plan sponsors. However, the big winners here may be plan participants who will have longer to elect and pay for COBRA coverage, longer to elect special enrollment in group health plans, and longer to file claims and appeals for benefits. Although the guidance is well-intentioned, it places a significant burden on employers, who may already be stretched thin dealing with furloughs and layoffs.

On April 28, 2020, the Departments issued a Joint Notice (later published in the Federal Register on May 4, 2020), Notice 2020-01, FAQs, and a news release that explain the various extensions. Although the guidance provides relief for both health and welfare plans and retirement plans, this Update focuses on the relief for health and welfare plans. In addition, this Update explains the recent changes to the COBRA model notices that were issued in separate DOL guidance on May 1, 2020.

I. The Outbreak Period

As discussed in Parts II and III below, the Joint Notice and Notice 2020-01 generally apply during the “Outbreak Period,” which is the period beginning March 1, 2020 and ending 60 days after the announced end of the National Emergency, declared by President Trump on March 13, 2020, or such other date announced by the Departments in a future notification. Because the end of the National Emergency has not yet been announced, the Outbreak Period is currently ongoing and it is not known when the Outbreak Period will end. In no event, however, will the Outbreak Period exceed one year.

II. Extension of Certain COBRA, Special Enrollment, and Claim and Appeal Deadlines

In the Joint Notice, DOL and Treasury extend certain deadlines under ERISA and the Internal Revenue Code in order to preserve benefits for participants and beneficiaries during the COVID-19 emergency. Effective May 4, 2020, the Joint Notice requires group health plans to disregard the Outbreak Period when determining certain deadlines for COBRA, special enrollment, and benefit claims and appeals.

The extension effectively results in the tolling of various deadlines for an amount of time that is, as of now, undetermined. Group health plans will have to grapple with the unknown end-date, and, at the same time, notify participants as soon as possible regarding these important extensions. The Joint Notice includes various examples to illustrate how this tolling works. The examples are written assuming the National Emergency ended April 30, 2020 and the Outbreak Period ends June 29, 2020. However, the true end-dates for the National Emergency and Outbreak Period are currently unknown.

Below is the list of deadlines subject to the extension, as well as some accompanying examples taken directly from the Joint Notice:

COBRA Extensions Intended to Help Employees:

1. The 60-day deadline for an individual to elect COBRA coverage;

   Example 1 from the Joint Notice

   Facts: Individual A works for Employer X and participates in X’s group health plan. Due to the National Emergency, Individual A 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. Individual A is provided a COBRA election notice on April 1, 2020. What is the deadline for A to elect COBRA?

   Conclusion: In Example 1, Individual A is eligible to elect COBRA coverage under Employer X’s plan. The Outbreak Period is disregarded for purposes of determining Individual A’s COBRA election period. The last day of Individual A’s COBRA election period is 60 days after June 29, 2020, which is August 28, 2020.

2. The 45-day deadline for an individual to make an initial COBRA premium payment;
3. The 30-day deadline for an individual to make a subsequent monthly COBRA premium payment;

   Example 3 from the Joint Notice

   Facts: On March 1, 2020, Individual C was receiving COBRA continuation coverage under a group health plan. More than 45 days had passed since Individual C had elected COBRA. Monthly premium payments are due by the first of the month. The plan does not permit qualified beneficiaries longer than the statutory 30-day grace period for making premium payments. Individual C made a timely February payment, but did not make the March payment or any subsequent payments during the Outbreak Period. As of July 1, Individual C has made no premium payments for March, April, May, or June. Does Individual C lose COBRA coverage, and if so for which month(s)?

   Conclusion: In this Example 3, the Outbreak Period is disregarded for purposes of determining whether monthly COBRA premium installment payments are timely. Premium payments made by 30 days after June 29, 2020, which is July 29, 2020, for March, April, May, and June 2020, are timely, and Individual C is entitled to COBRA continuation coverage for these months if she timely makes payment. Under the terms of the COBRA statute, premium payments are timely if made within 30 days from the date they are first due. In calculating the 30-day period, however, the Outbreak Period is disregarded, and payments for March, April, May, and June are all deemed to be timely if they are made within 30 days after the end of the Outbreak Period. Accordingly, premium payments for four months (i.e., March, April, May, and June) are all due by July 29, 2020. Individual C is eligible to receive coverage under the terms of the plan during this interim period even though some or all of Individual C’s premium payments may not be received until July 29, 2020. Since the due dates for Individual C’s premiums would be postponed and Individual C’s payment for premiums would be retroactive during the initial COBRA election period, Individual C’s insurer or plan may not deny coverage, and may make retroactive payments for benefits and services received by the participant during this time.

   Example 4 from the Joint Notice

   Facts: Same facts as Example 3. By July 29, 2020, Individual C made a payment equal to two months’ premiums. For how long does Individual C have COBRA continuation coverage?

   Conclusion: Individual C is entitled to COBRA continuation coverage for March and April of 2020, the two months for which timely premium payments were made, and Individual C is not entitled to COBRA continuation coverage for any month after April 2020. Benefits and services provided by the group health plan (e.g., doctors’ visits or filled prescriptions) that occurred on or before April 30, 2020 would be covered under the terms of the plan. The plan would not be obligated to cover benefits or services that occurred after April 2020.

4. The 60-day deadline for an individual to notify the plan of certain COBRA qualifying events (i.e., divorce or a dependent child ceasing to be a dependent child);
5. The deadline for a COBRA qualified beneficiary to notify the plan of a determination of disability (this appears to include both the 60-day deadline for a COBRA qualified beneficiary to notify the plan when they receive a disability determination and the 30-day deadline for a COBRA qualified beneficiary to notify the plan of a final determination that the individual is no longer disabled, but guidance clarifying whether it applies to both would be helpful);

COBRA Extensions Intended to Help Employers:

6. The 14-day deadline for plan administrators to provide COBRA election notices to qualified beneficiaries;

   Note: Although employers can avail themselves of this relief if needed, they should consider that doing so may further extend related COBRA deadlines, such as the deadline for individuals to elect and pay for COBRA coverage. Accordingly, employers may want to consider only relying on this extension when necessary.

Special Enrollment Extensions:

7. The 30-day special enrollment period for individuals that lose health coverage;
8. The 30-day special enrollment period for individuals that gain new dependents;

   Example 2 from the Joint Notice

   Facts: Individual B is eligible for, but previously declined participation in, her employer-sponsored group health plan. On March 31, 2020, Individual B gave birth and would like to enroll herself and the child into her employer’s plan; however, open enrollment does not begin until November 15. When may Individual B exercise her special enrollment rights?

   Conclusion: In Example 2, the Outbreak Period is disregarded for purposes of determining Individual B’s special enrollment period. Individual B and her child qualify for special enrollment into her employer’s plan as early as the date of the child’s birth. Individual B may exercise her special enrollment rights for herself and her child into her employer’s plan until 30 days after June 29, 2020, which is July 29, 2020, provided that she pays the premiums for any period of coverage.

9. The 60-day special enrollment period for individuals that lose or gain eligibility for Medicaid or children’s health insurance program (CHIP);

Benefit Claims and Appeals Extensions:

10. The deadline for an individual to file a benefit claim under ERISA’s claim procedures;

    Example 5 from the Joint Notice

    Facts: Individual D is a participant in a group health plan. On March 1, 2020, Individual D received medical treatment for a condition covered under the plan, but a claim relating to the medical treatment was not submitted until April 1, 2021. Under the plan, claims must be submitted within 365 days of the participant’s receipt of the medical treatment. Was Individual D’s claim timely?

    Conclusion: Yes. For purposes of determining the 365-day period applicable to Individual D’s claim, the Outbreak Period is disregarded. Therefore, Individual D’s last day to submit a claim is 365 days after June 29, 2020, which is June 29, 2021, so Individual D’s claim was timely.

11. The deadline for an individual to appeal an adverse determination under ERISA’s appeal procedures;

    Example 6 from the Joint Notice

    Facts: Individual E received a notification of an adverse benefit determination from Individual E’s disability plan on January 28, 2020. The notification advised Individual E that there are 180 days within which to file an appeal. What is Individual E’s appeal deadline?

    Conclusion: When determining the 180-day period within which Individual E’s appeal must be filed, the Outbreak Period is disregarded. Therefore, Individual E’s last day to submit an appeal is 148 days (180 − 32 days following January 28 to March 1) after June 29, 2020, which is November 24, 2020.

12. For a group health plan, the 4-month deadline for an individual to request an external review after receipt of an adverse benefit determination or final internal adverse benefit determination; and
13. For a group health plan, the 4-month deadline (or, if later, 48 hours following receipt of notice of an incomplete request) for an individual to file information to perfect a request for external review of their benefit determination upon learning their request was incomplete.

III. EBSA Disaster Relief Notice 2020-01

DOL issued Notice 2020-01, in coordination with the other Departments, to provide guidance for employee benefits plans navigating the COVID-19 emergency. Notice 2020-01, which generally applies during the Outbreak Period, extends various deadlines for plan sponsors, as discussed below.

1. Extended Disclosure Deadlines
   First, Notice 2020-01 provides that, effective April 28, 2020, an employee benefit plan and plan fiduciary will not violate ERISA for failing to timely furnish a notice, disclosure, or document required to be furnished under Title I of ERISA (e.g., summary plan description and summary of material modification) during the Outbreak Period. As with the extension provided in the Joint Notice, plans that intend to rely on this relief may want to keep in mind that the final deadlines remain unknown. Further, this relief only applies if: (1) the obligation does not involve a notice or disclosure addressed in the Joint Notice; and (2) the plan and fiduciary act in good faith and furnish the notice, disclosure, or document as soon as administratively practicable under the circumstances.
2. Electronic Disclosure Relief
   Notice 2020-01 also relaxes electronic disclosure requirements stating that “good faith” action includes using electronic means of communication when the fiduciary reasonably believes the plan participants and beneficiaries have effective access to electronic means of communication. Notice 2020-01 specifically mentions the use of email, text messages, and continuous access websites. When making this determination, employers may want to have certain processes in place to support their good faith efforts. For example, an employer may want to implement a system under which it receives notice of an undeliverable email so that, if necessary, it can either obtain the participant’s or beneficiary’s correct email address or mail the disclosure to the participant or beneficiary.
3. Form 5500 and Form M-1 Relief
   Next, Notice 2020-01 offers relief for Form 5500 Annual Return/Report filings, as provided on the IRS website. This relief provides that the deadline for Forms 5500 due on or after April 1, 2020 and before July 15, 2020 is now July 15, 2020.
   
   Although not expressly listed on the IRS website, Notice 2020-01 provides that the July 15, 2020 deadline also applies to Form M-1 filings, which are required for multiple employer welfare arrangements and certain entities claiming exception.
4. Fiduciary Compliance Guidance
   Finally, Notice 2020-01 provides overarching guidance for plans and plan fiduciaries. According to Notice 2020-01, plans must act reasonably, prudently, and in the interest of their participants and beneficiaries, and fiduciaries should prevent the loss or undue delay of benefits by making reasonable accommodations. At this point, it is unclear how broadly the Departments will construe this provision. Accordingly, employers may want to consider what this rule may require of them before denying coverage to a participant or beneficiary.

IV. DOL Publishes Updated Model COBRA Notices

On May 1, 2020, DOL updated its model general notice and model election notice. The updates do not have anything to do with the extensions noted above, but, rather, are designed to ensure beneficiaries understand how COBRA interacts with Medicare. DOL issued accompanying FAQs About COBRA Model Notices, which further explain the interactions between COBRA and Medicare, noting which coverage pays first when an individual is enrolled in both.

Although DOL has not provided a specific deadline, plan sponsors may want to consider updating their COBRA notices as soon as possible to add the new model language. Failure to do so could result in litigation for deficient COBRA notices, which is already on the rise.

V. Conclusion

Although the Joint Notice implies plan amendments may not be needed to implement the deadline extensions, some employers may decide that is still the safest course. In addition, the Joint Notice does not apply directly to insurers or third-party administrators so plan sponsors may need to coordinate with such entities to confirm they will comply with the extended deadlines when administering COBRA, special enrollment, and claims and appeals.

Employers may want to carefully consider how and when to communicate these important changes to employees. Employers may decide to send a comprehensive notice regarding the deadline extensions to all employees. In addition, the extended deadlines could require changes to COBRA notices, special enrollment notices, summary plan descriptions, and claims and appeal correspondence. Failure to send important notices to employees, especially those who have been furloughed or laid-off, could increase the risk of litigation.

For other important COVID-19 changes for group health plans, see our SW Benefits Update, “Asked and Answered: Agencies Issue FAQs on COVID-19 Requirements for Group Health Plans.”