The Department of Labor issued Notice 2021-01 on February 26, 2021 to address the expiration of the extension of certain benefit deadlines that expired on February 28, 2021. See the summary of Notice 2020-01 at the end of this blog for more information.
Notice 2021-01 confirms that the guiding principle for administering employee benefit plans is to act reasonably, prudently, and in the interest of the workers and their families who rely on their employee benefit plans for their physical and economic well-being. This means that plan fiduciaries should make reasonable accommodations to prevent the loss of or undue delay in payment of benefits in such cases and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames. Steps to take include:
- 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.
- 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.
- In the case of ERISA group health plans, plans should consider ways to ensure that participants and beneficiaries who are losing coverage under their group health plans are made aware of other coverage options that may be available to them, including the opportunity to obtain coverage through the Health Insurance Marketplace in their state. In this regard, in accordance with the President’s Executive Order 14009, a special enrollment period is available to the consumers in the 36 states that use the HealthCare.gov platform starting on February 15 and continuing through May 15. At least 13 states plus the District of Columbia, which operate their own Marketplace platforms, are offering a similar opportunity. For more information on the Health Insurance Marketplace special enrollment period, go to HealthCare.gov. For a list of states that do not use HealthCare.gov and links to their Marketplaces, go to: https://www.healthcare.gov/marketplace-in-your-state/.
Notice 2021-01 clarifies extension relief to the earlier of (1) one year from the due date or (2) 60 days after the announced end of the Outbreak Period and provides the following examples:
- If a qualified beneficiary, for example, would have been required to make a COBRA election by March 1, 2020, the Notice delays that requirement until February 28, 2021;
- If a qualified beneficiary would have been required to make a COBRA election by March 1, 2021, the 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; and
- 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 DOL acknowledges that there may be instances when full and timely compliance with ERISA’s disclosure and claims processing requirements by plans and service providers may not be possible, including when pandemic or natural disaster-related disruption to a plan or service provider’s principal place of business makes compliance with pre-established time frames for certain claims’ decisions or disclosures impossible. In the case of fiduciaries that have acted in good faith and with reasonable diligence under the circumstances, the DOL’s approach to enforcement will be marked by an emphasis on compliance assistance and includes grace periods and other relief.
The DOL, IRS and Department of the Treasury continue to monitor the effects of the COVID-19 outbreak as they relate to employee benefit plans and have been engaged with stakeholders regarding the continued need for relief. The Agencies are of the view that continued relief may be needed to preserve and protect private-sector employee benefit plans, so stay tuned.
2020 Extension of Deadlines
Notice 2020-01 provided an extension for a number of deadlines so plan participants, beneficiaries, and employers have additional time to make critical health coverage and other decisions affecting benefits during the COVID-19 outbreak. For group health plans, subject to ERISA or the Internal Revenue Code, the relief provides additional time to comply with certain deadlines affecting COBRA continuation coverage, special enrollment periods, claims for benefits, appeals of denied claims, and external review of certain claims.
The original relief period stated in Notice 2020-01, began March 1, 2020 and continues the earlier of 60 (sixty) days after the announced end of the COVID-19 National Emergency or a period of 1 year from the date the individual action would otherwise have been required or permitted. One year from March 1, 2020, is February 28, 2021.
Please be aware that the determination of the requirements and the application of specific laws and regulations to each employee welfare plan and/or employer may differ due to a number of variables. Nothing in this newsletter should be construed as tax or legal advice.