March 04, 2021

To provide relief during the COVID-19 National Emergency that began March 1, 2020, the departments of Labor (DOL) and Treasury released guidance (the joint notice) in May 2020 extending the deadlines for a number of employee benefit plan requirements. The extensions aim to ensure individuals do not miss key deadlines during the pandemic that could cause, for example, lapse of group health plan coverage or denial of a valid benefits claim. Separate DOL guidance (Notice 2020-01) also extended certain deadlines to help employers and other plan sponsors, fiduciaries, and service providers meet some — but not all — of their ERISA obligations during the pandemic. Now that President Biden has extended the COVID-19 National Emergency, DOL Notice 2021-01 clarifies and extends the 2020 relief for health and welfare plans. A separate GRIST reviews the deadline relief for retirement plans.

Outbreak period relief

The deadline relief under ERISA and the Internal Revenue Code applies during the “outbreak period,” defined as the period from March 1, 2020, through 60 days after the announced end of the COVID-19 National Emergency. The National Emergency was due to automatically terminate on its anniversary date — March 1, 2021 — but President Biden has continued the emergency declaration for another year to March 1, 2022, unless congressional or presidential action terminate the emergency earlier. The COVID-19 National Emergency relief comprises:

 

  • DOL Notice 2020-01 grants employers, plan sponsors, fiduciaries and service providers extra time to provide required notices and disclosures — for example, summaries of material modifications (SMMs) and summary plan descriptions (SPDs) — and to complete certain other plan-related actions required by Title I of ERISA.
  • A joint notice gives participants and beneficiaries extra time to enroll in a group health plan during a HIPAA special enrollment period; elect COBRA continuation coverage and make premium payments; file benefit claims and appeal adverse benefit determinations under any employee benefit plan (including disability plans); and file for an external review under a group health plan. The joint notice also provides health plan sponsors an extension for furnishing the COBRA election notice to qualified beneficiaries and extends several other deadlines for retirement plans and their participants.

In addition, DOL has issued FAQs to help health and retirement plan participants, beneficiaries and benefit plan sponsors understand their rights and responsibilities under Title I of ERISA.

 

Non-ERISA health plans. The Department of Health and Human Services (HHS) has agreed to extend similar deadline relief to state and local governmental group health plans and health insurance issuers that provide group health plan coverage. HHS also is encouraging nonfederal governmental group health plan sponsors, states and issuers to give participants and beneficiaries the extra time provided by the joint notice. This means that employer group health plans (including nonfederal government employers) and their participants should be entitled to the COVID-19 National Emergency relief. Church plans should discuss with counsel whether any of the extended deadlines apply.

 

Relief limited to one year or less

The deadline relief cannot apply for more than one year. Under ERISA Section 518 (29 USC § 1148), DOL can issue guidance disregarding a period of up to one year in determining the required or permitted date for completing any action. Internal Revenue Code Section 7508A contains a similar one-year limit on deadline suspensions. Relief is available if the employee benefit plan or its participants, plan sponsors, or plan administrators are in an area affected by a presidentially declared disaster, a terrorist or military action, or a public health emergency declared by the HHS secretary. Under ERISA, plans must be operated in accordance with plan terms, but plans won’t be treated as failing that requirement because they disregard any period of time allowed under the COVID-19 National Emergency relief.

 

Notice 2021-01 clarifies what this means for the outbreak period relief in light of the COVID-19 National Emergency continuing beyond one year. Individuals and plans with time frames subject to the relief in Notice 2020-01 and the joint notice will have their applicable periods disregarded until the earlier of:

 

  • One year from the date a particular individual or plan was first eligible for relief
  • 60 days from the end of the COVID-19 National Emergency (i.e., the end of the outbreak period)

Once the relief expires, the paused time frames for individuals and plans will resume. According to Notice 2021-01, Treasury and HHS concur with this guidance on the continuation of relief for benefit plan actions under those departments’ jurisdiction.

 

Relief for health and benefit plan sponsors

DOL Notice 2020-01 grants health and benefit plan sponsors, fiduciaries and service providers extra time to provide a number of required notices and disclosures and to complete some — but not all — plan-related actions required by Title I of ERISA. This relief is described below.

 

Relief for required health and benefit plan filings

DOL Notice 2020-01 extended the Form 5500 deadline relief previously announced by IRS (Notice 2020-23) to Form M-1. The extended deadline for Form 5500 and M-1 filings otherwise due on or after April 1, 2020, through July 14, 2020, was July 15, 2020. Similar relief was not provided for 2019 calendar-year plans, and Notice 2021-01 doesn’t address this relief.

 

Relief for required notices and disclosures

Under Notice 2020-01, a plan and its responsible fiduciary that make a good-faith effort to deliver certain ERISA notices or disclosures “as soon as administratively practicable under the circumstances” will not be in violation of ERISA for failing to meet the required time frames.

 

The deadline relief during the outbreak period applies to notices, disclosures and other documents required by ERISA Title I, except those addressed by the joint notice described later. For example, the relief applies to summary plan descriptions (SPDs), summary of material modifications (SMMs), summaries of benefits and coverage (SBCs), the COBRA general notice, the notice about the unavailability of COBRA coverage, the notice about the early termination of COBRA coverage, the HIPAA special enrollment rights notice, and explanations of benefits (EOBs), among other ERISA notices and disclosures. (See DOL’s reporting and disclosure guide for a comprehensive list of ERISA-required notices and disclosures.) According to informal comments by DOL staff, the only ERISA-required notice or disclosure not covered by this relief is the COBRA election notice, since it is specifically addressed in the joint notice.

 

Plan sponsors may not rely on this relief to delay notices indefinitely, but won’t be penalized if circumstances make meeting delivery deadlines impossible during the outbreak period.

 

Relief period limited to one year or less. Notice 2021-01 clarifies that the deadline relief for these ERISA plan notice and disclosures cannot extend beyond one year. This means that plans must provide any particular notice or disclosure subject to the outbreak period relief within one year of the otherwise applicable deadline or by the end of the outbreak period, whichever is sooner. For example, a plan disclosure ordinarily due by Sept. 1, 2020, would have to be provided by Aug. 31, 2021 (or 30 days after the end of the outbreak period if that date occurs first, which seems unlikely at this point).

 

Electronic delivery allowed

Notice 2020-01 relaxes the standard safe-harbor rules for electronic disclosures by allowing plans sponsors and administrators to use e-delivery methods, such as text messages, emails or websites, as long as the plan fiduciary reasonably believes recipients can easily access those means of communication. Plan sponsors and administrators can apparently use e-delivery during the outbreak period, even if DOL’s current rules for group health plans and other benefits don’t allow it. However, Notice 2021-01 appears to imply that if a plan cannot demonstrate that a notice or disclosure provided under the e-delivery relief in Notice 2020-01 was actually received, the sponsor or administrator may need to refurnish that notice or disclosure. Clarification of this point would be helpful.

 

No relief for late deposits of health plan contributions

Notice 2020-01 doesn’t include relief for temporary delays in forwarding participant contributions to health plans. However, the notice specifically says that DOL won't pursue enforcement action against an employer for a temporary delay — due solely to the COVID-19 pandemic — in forwarding participant contributions or loan repayments to a pension plan. Even so, retirement plan sponsors and service providers still must act reasonably, prudently and in the interest of employees to forward contributions as soon as practicable under the circumstances.

 

Fiduciary compliance guidance

Notice 2020-01 explains DOL’s general approach to enforcement during the COVID-19 emergency. To prevent loss or undue delay of benefits due to failure to meet established deadlines, the notice advises plan sponsors to make “reasonable accommodations” for participants and beneficiaries encountering problems due to the COVID-19 outbreak. DOL understands that plans and service providers may not be able to fully comply with requirements for claim processing and other actions required by ERISA. The agency will emphasize compliance assistance (rather than penalties) and provide grace periods and other relief when appropriate for plans and fiduciaries acting in good faith and with reasonable diligence under the circumstances.

 

EBSA Notice 2021-01 reiterates this position but emphasizes that the “guiding principle” is for plan administrators to “act reasonably, prudently, and in the interest of the workers and their families.” This means plans should “take steps” to minimize the loss of benefits because of a failure to meet deadlines. Examples in the notice suggest plans should:

 

  • Reissue or amend plan disclosures if they failed to provide accurate information about the required time for participants and beneficiaries to take action (e.g., COBRA election notices and claims procedure notices)
  • Consider proactively notifying plan participants and COBRA qualified beneficiaries of an approaching deadline that would otherwise cause them to lose protections, benefits or rights under the plan
  • Consider ways to ensure that participants and beneficiaries who are losing group health plan coverage are aware of other coverage options that may be available, including coverage through the health insurance marketplace in their state

Relief for several participant deadlines

For group health plans, the joint notice requires plan sponsors and administrators to disregard the outbreak period when determining certain deadlines for individuals and participants to invoke HIPAA special enrollment rights, file benefit claims, appeal and request external reviews of denied claims, and elect and pay for COBRA continuation coverage. For disability, retirement, and other plan participants and beneficiaries, the relief provides additional time to make benefit claims and appeal denied claims. Any deadline relief provided must not exceed one year. The extended deadlines are discussed below.

 

HIPAA special enrollment period

HIPAA generally requires a special enrollment period for employees and their families under certain circumstances, including when an employee or the employee’s spouse or dependent loses other coverage or when an eligible employee gains a dependent by birth, adoption, placement for adoption, or marriage. The special enrollment period normally is 30 days, but runs 60 days if an employee or dependent loses eligibility for state Medicaid or CHIP coverage or becomes eligible for state premium assistance under Medicaid or CHIP. Retroactive coverage is required only after special enrollments for birth, adoption or placement for adoption.

 

Relief provided. The joint notice disregards the outbreak period in calculating the 30- or 60-day special enrollment period. Notice 2021-01 clarifies that this relief ends on the earlier of one year from the date the relief began for a particular individual or the end of the outbreak period. This extension may allow additional employees and dependents who may have missed the deadline for special enrollment to join group health plans.

 

Example. Mary is enrolled in her employer’s group health plan. On July 31, 2020, Mary has a baby and typically would have had until Aug. 30, 2020 to enroll the child in the group health plan. Because the outbreak period is disregarded for purposes of determining the special enrollment period, Mary now has until Aug. 30, 2021, or 30 days after the end of the outbreak period if that date occurs first, to enroll her baby. This coverage will apply retroactively to the date of birth, provided Mary pays the premiums for any period of coverage.

 

Claims procedure timeline

ERISA-covered plans must establish and maintain a procedure for filing claims and appealing adverse benefit determinations. For example, a plan may establish a one-year deadline for filing an initial claim. Group health plans and disability plans must provide claimants at least 180 days after receipt of an adverse benefit determination to appeal (60 days for pension and other welfare benefit plans).

 

Under the joint notice, plans must disregard the outbreak period for up to one year when determining deadlines for filing:

 

  • Initial benefit claims
  • Appeals of adverse benefit determinations

Example. Peter is a participant in a group health plan. On April 1, 2020, Peter received medical treatment for a condition covered under the plan, which requires submitting claims within 365 days of the date of service. Under the outbreak period relief, the time frame for Peter to submit his claim doesn’t begin to run until April 1, 2021 (one year from the date the clock would have otherwise started). Peter's last day to submit a claim is 365 days after April 1, 2021, which is April 1, 2022.

 

The relief also applies to claims under a health reimbursement arrangement (HRA) or health flexible savings arrangement (health FSA) and could complicate administration of calendar-year plans with a 90-day run-out period. The extended deadline doesn’t apply to dependent care FSAs because they are not subject to ERISA.

 

Example. Assume the COVID-19 National Emergency ends on June 30, 2021. This would mean the outbreak period ends 60 days later on Aug. 29, 2021. Peter elected to contribute to a 2020 calendar-year health FSA, whose terms provide a run-out period allowing him to submit claims incurred in 2020 until the end of March 2021. Due to the outbreak period relief, Peter now has until 90 days after the end of the outbreak period to submit claims incurred in 2020. This means the plan cannot require a forfeiture of any of the remaining balance in Peter’s health FSA until Nov. 27, 2021. (See this US Health News blog describing separate pandemic relief that includes unlimited carryover or extended grace-period options for health and dependent care FSAs.)

 

External review

The Affordable Care Act (ACA) outlines external review standards for nongrandfathered group health plans and health insurance issuers offering nongrandfathered group health plans. For plans using the federal external review process, a participant has four months after receiving an adverse benefit determination to file for an external review. Plans or issuers using this review process must provide a notice describing any additional information or materials needed to make the request complete and allow a claimant to submit those items within the four-month filing period or 48 hours of receiving the notice, whichever is later.

 

The relief disregards the outbreak period (or one year, if shorter) in determining the deadlines for:

 

  • Filing for external review under the federal process
  • Perfecting a request for external review under the federal process

Example. Assume the outbreak period ends on July 30, 2021. Earlier in 2021, Ann received an adverse benefit determination after exhausting appeals under her employer’s group health plan. The outbreak period — or one year, if shorter — is disregarded in determining the four-month period during which Ann may request an external review under the federal process. So the last day Ann could ask for an external review is Nov. 30, 2021.

 

COBRA continuation coverage

The joint notice relief disregards the outbreak period (or one year, if shorter) in determining the deadlines for a participant or qualified beneficiary to:

 

  • Elect COBRA continuation coverage
  • Pay the initial month of a COBRA premium
  • Pay ongoing COBRA premiums
  • Notify the plan about a qualifying event or a disability determination

This relief has drastically extended the period for a qualified beneficiary to give notice of a qualifying event or a disability determination and elect COBRA coverage retroactively to the date of the qualifying event or loss of coverage.

 

The relief also extends the time for paying any COBRA premiums. Coverage cannot be denied once COBRA is elected and payments are eventually made and applied retroactively. Under existing COBRA rules, group health plans have the discretion to cancel or continue COBRA continuation coverage until the plan receives payment of COBRA premiums and must provide notice to providers about coverage during that period. This particular rule is apparently unaffected by the COVID-19 National Emergency relief. Plans may want to reconsider how to handle payment of claims during this period, given the extended deadlines for paying COBRA premiums. Regardless, plans need to continue providing the required notices to providers.

 

COBRA election period. A qualified beneficiary typically has at least 60 days to elect COBRA coverage, starting on the date the election notice is sent. When elected within that time frame, COBRA coverage is effective retroactively to the date of the qualifying event (or loss of coverage, if later). The relief provided by the joint notice disregards the outbreak period (or one year, if shorter) for the purposes of determining COBRA election deadlines.

 

Example. Sam participated in his employer’s group health plan, but his hours were reduced so he no longer met the plan's eligibility requirements. Sam’s coverage was slated to terminate on March 31, 2020, if he didn’t timely elect COBRA coverage. Sam’s employer provided him a COBRA election notice on April 1, 2020. Assuming the outbreak period continues through at least May 2021, Sam has until May 31, 2021, to make his election (that is, 60 days after the one-year anniversary of when Sam’s election period would have begun absent the relief). Sam elects COBRA on May 31, 2021, with coverage effective retroactively to April 1, 2020.

 

If Sam’s reduction in hours occurs in 2021 rather than 2020, his time frame for electing COBRA may be shorter if the outbreak period ends before the one-year anniversary of his original deadline to elect COBRA absent the relief.

 

Initial COBRA premium payment. The deadline for the initial payment typically is 45 days after the COBRA election is made. Initial payment deadlines falling within the outbreak period are automatically extended to the end of the outbreak period or one year, whichever is shorter. For example, if a qualified beneficiary elected COBRA coverage on Feb. 1, 2020, the initial payment normally would have been due by March 17, 2020. Because of the relief provided by the joint notice, the 45-day time period was paused on March 1, 2020. The new deadline is March 17, 2021 (one year from March 1, 2020, plus the 17 days that were remaining in the payment period when the time frame was paused). The extension of the initial payment deadline gets more complicated for COBRA periods that begin during the outbreak period.

 

Example. Continuing with Sam from the previous example, the initial month of Sam’s COBRA coverage is April 2020. Sam’s first COBRA premium normally would be due 45 days after the COBRA election or no later than July 15, 2020 (60 days to elect, plus 45 days to pay). But the relief requires the plan to disregard the outbreak period (or one year, if shorter) when counting down Sam’s 45 days to pay the initial COBRA premium. Since Sam doesn’t elect COBRA coverage until May 31, 2021, his initial premium isn’t due until July 15, 2021. But if the outbreak period continues through at least July 2021, the due date for the initial COBRA premium is also subject to the relief. This means Sam’s initial premium payment wouldn’t be due until July 15, 2022 (one year and 45 days after his election), or 45 days after the end of the outbreak period if sooner. The plan may — but does not have to — pay for any claims Sam may have incurred after April 1, 2020 until this initial premium payment is made.

 

Ongoing COBRA premium payments. Payments after the initial COBRA premium payment typically are considered timely if made within 30 days from the due date. The joint notice provides that the outbreak period should be disregarded in calculating this 30-day period. Notice 2021-01 clarifies that the period of relief cannot exceed one year. If COBRA was already in place before the outbreak period began, any payments due during the outbreak period will be considered timely if made within 30 days after one-year anniversary of each otherwise applicable monthly premium due date, or within 30 days after the end of the outbreak period, whichever is sooner. Determining the premium due date is even more complicated, however, for COBRA coverage that begins during the outbreak period.

 

Example. Continuing the previous two examples, Sam would normally owe ongoing COBRA premiums beginning in May 2020. But because the outbreak period is ongoing (and assume it continues through all of 2021 for this example), the payments will be considered timely if made within 30 days after the one-year anniversary of each otherwise applicable due date. This means these monthly premium payments are each due on a rolling basis, one year after their original due dates.

 

According to current guidance, if Sam still has outstanding monthly COBRA premiums due when the outbreak period comes to an end, he will have 30 days after the end of the outbreak period to pay all outstanding premiums. Sam is entitled to COBRA continuation coverage for any month after April 2020 if he makes the premium payments. The plan would not have to cover benefits or services for any months for which premium payments are not timely made. This means if Sam pays some, but not all, of the outstanding premiums within 30 days after the outbreak period ends, the plan will only have to cover claims incurred during the months for which premium payments were made.

 

COBRA regulations allow plans to consider payments timely — even if made beyond 30 days from the due date — if plan terms allow for a later payment date. Careful attention should be paid to plan terms when determining COBRA premium due dates that may be extended by the outbreak period relief.

 

Notice of qualifying event or disability determination. COBRA generally requires individuals to notify the plan of a qualifying event (a divorce, a dependent child aging off the plan or a disability determination) within 60 days of the event or any longer period allowed by the plan. Any notice periods running past March 1, 2020, are paused for one year or until the end of the outbreak period, whichever is shorter.

 

Relief for plans to provide COBRA election notice

The joint notice specifically provides that group health plans may disregard the outbreak period when determining the deadline to provide COBRA election notices to qualified beneficiaries. Notice 2021-01 clarifies that the disregarded period cannot extend beyond one year, even if the outbreak period continues longer.

 

The COBRA election notice is typically due within 14 days after the employer or qualified beneficiary notifies the plan administrator about the qualifying event. If the employer is also the plan administrator, it must provide the notice within 44 days after either the date of the qualifying event or if the plan provides that COBRA coverage starts on the date of loss of coverage, the date of the loss of coverage due to the qualifying event. For qualifying events that occur after March 1, 2020, these time periods will not start to run until one year after the otherwise applicable start date or until the outbreak period is over, whichever occurs first.

 

If a COBRA election notice is delayed, premium-payment timing issues like those discussed earlier could arise. Depending on the length of the relief period, COBRA coverage could be elected many months after the qualifying event. Coverage would be effective retroactively, but only if the initial premium payment is made. Coverage for the remainder of the COBRA period would depend on timely payment of the monthly premiums, each of which also appear to be subject to the outbreak period relief if the outbreak period is ongoing.

 

Model COBRA notices don’t reflect relief guidance

In 2020, DOL issued updated model general and election notices — in English and Spanish — to help Medicare-eligible individuals make key decisions about their health coverage when they have a COBRA qualifying event. Under long-standing DOL regulations, plan sponsors accurately completing and timely distributing these model notices are considered to comply with COBRA notice requirements. However, even when using the DOL model notice, plan sponsors risk lawsuits from individuals under ERISA Section 502 (29 USC § 1132), alleging the notice is statutorily deficient. The current model notices do not address the extended COBRA deadlines required by the COVID-19 National Emergency relief.

 

Employer next steps

Employers should:

 

  • Review the extended deadlines to understand how they may affect plan costs. Check with group health plan administrators — including third-party administrators (TPAs), claim administrators, COBRA administrators, carriers, FSA vendors and stop-loss vendors — to determine how Notice 2021-01’s clarification about the end of the relief period will affect plan administration.
  • Determine whether any previous communications about deadlines need to be corrected in light of the new guidance in Notice 2021-01, and plan accordingly.
  • Provide an SMM or other notice to all plan participants about the extended deadlines clarified by Notice 2021-01, and update all relevant plan documents and communications accordingly.
  • Determine whether, when and how to provide notices to plan participants, COBRA qualified beneficiaries and other individuals identifying deadlines related to the end of each individual’s relief period.
  • Consider using digital solutions to provide these notices since the electronic disclosure rules are relaxed during the outbreak period. But exercise caution about using electronic communications for individuals who don’t have access to company intranet or email or if the employer cannot confirm actual receipt.
  • Consider updating communications about coverage termination to include information on other coverage options, including the special enrollment period through May 15, 2021, for public exchange coverage through Healthcare.gov and most state-based health insurance marketplaces.
  • Discuss the extended deadlines for issuing SMMs and other updated documents and communications with legal counsel. Keep in mind the potential liability for untimely or inadequate ERISA notices and disclosures of important plan rights.
  • Contact enrollment vendors to find out if they are prepared to handle individualized extensions of HIPAA special enrollment periods.
  • Contact the plan’s COBRA vendor to make sure it is prepared to comply with individualized deadlines for COBRA elections and payments, and ask whether it will provide updated notices. Review the 2020 model notices and decide whether to use them or modified versions that mention deadline extensions for one year or until the end of the outbreak period, whichever is shorter.
  • Contact TPAs and other service providers to determine whether they are prepared to comply with extended time frames for claims, appeals and external reviews, and provide the appropriate notices (e.g., EOBs and claim denial letters).
  • Contact stop-loss providers to make sure they are aware of the extended deadlines that are individualized until the end of the outbreak period.
  • Watch for additional agency guidance/clarifications, particularly with respect to the operation of relief periods when the outbreak period comes to a definitive end.

 

Related resources

Non-Mercer resources

Mercer Law & Policy resources

Other Mercer resources

Cheryl Hughes
by Cheryl Hughes

Senior Principal, Mercer’s Law & Policy Group

Katharine Marshall
by Katharine Marshall

Senior Principal, Mercer's Law & Policy Group

Dorian Smith
by Dorian Smith

Partner, Mercer’s Law & Policy Group


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