DOL Issues Guidance on Continuing COVID-19 Relief for Employee Benefit Plans, Plan Participants, and Beneficiaries
Recognizing that many employee benefit plan participants and beneficiaries continue to struggle with ongoing challenges relating to the COVID-19 pandemic’s ongoing nature, the U.S. Department of Labor (DOL) recently issued guidance that continues relief for employee benefit plans.
DOL’s Employee Benefits Security Administration (EBSA) Disaster Relief Notice 2021-01 continues certain measures initially issued under EBSA Disaster Relief Notice 2020-01 and the Notice of Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak, which was issued jointly by the DOL, the Treasury Department, and the Internal Revenue Service.
Pursuant to emergency provisions within the Employee Retirement Income Security Act of 1974 (29 U.S.C. §1148) and the Internal Revenue Code (26 U.S.C. §7508A(b)), these notices suspended employee benefit plan deadlines — such as for furnishing benefit statements and for health insurance continuation under the Consolidated Omnibus Budget Reconciliation Act (COBRA) — until 60 days after the end of the presidentially declared coronavirus disaster, which officially began March 1, 2020. However, those provisions limit the relief to a one-year suspension, which would lapse before a presidential declaration of the crisis’s end.
Updated Guidance and Examples
The newly issued EBSA guidance extends the notice requirement relief for employee benefit plans and individuals until the earlier of the following two scenarios:
1) One year from the date on which they first became eligible for the relief, for which the earliest applicable date would be March 1, 2021.
2) 60 days after the presidentially declared COVID-19 national emergency officially ends.
1) If a qualified beneficiary would have had to elect for COBRA by March 1, 2020, the first day on which anyone would have been eligible for the initial relief, their relief period would end February 28, 2021, which is one year later (as the end of the COVID-19 emergency has not yet been announced). Therefore, in this situation, the qualified beneficiary must make an election by March 1, 2021.
2) Similarly, if a plan would have had to furnish a notice by March 1, 2020, the relief would end with respect to that particular notice on February 28, 2021, and the plan would have to satisfy the requirement by March 1, 2021.
3) If a qualified beneficiary would have had to make a COBRA election by March 1, 2021, the qualified beneficiary may elect by the earlier of March 1, 2022, which is one year from the original deadline, or 60 days after the COVID-19 national emergency ends.
4) Likewise, if a plan would have had to furnish a disclosure by March 1, 2021, the new date for required disclosure would be the earlier of March 1, 2022, or 60 days after the COVID-19 national emergency ends.
Within the guidance, DOL recognized that affected plan participants and beneficiaries may continue to encounter problems due to the COVID-19 pandemic’s ongoing nature, even after the original relief would have lapsed under the statutory one-year limit. In response, the DOL advised that plan fiduciaries should take steps to minimize the possibility of individuals’ losing benefits because of a failure to comply with pre-established deadlines.
For example, DOL suggested that the plan administrator or other fiduciary consider sending a notice regarding the end of the relief period, when the relief’s end may expose a participant or beneficiary to a risk of losing protections, benefits, or rights under the plan.
Additionally, benefit plans may need to reissue or amend disclosures issued before or during the pandemic if those disclosures provided inaccurate information regarding the deadlines by which participants and beneficiaries had to act (e.g., COBRA election notices).
DOL further specified that group health plans should consider how they can inform participants and beneficiaries who will lose coverage under their group health plans about other coverage options that may be available, such as policies through their state’s health insurance marketplace. Consumers in a number of states — including New York — may participate in a special enrollment period, which started February 15, 2021, and continues through May 15, 2021.