Extension Of Timeframes For Employee Benefit Plans
Last week, the Departments of Labor, Health and Human Services, and Treasury (collectively, the “Departments”) jointly issued helpful guidance for employee benefit plans that extend certain deadlines and offer other relief in light of the COVID-19 pandemic.
HIPAA, COBRA, and Claims-Related Timeframes Delayed
On April 29, 2020, the Departments jointly issued a final rule extending certain timeframes under the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Internal Revenue Code (“Code”) for the duration of the national emergency related to the COVID-19 pandemic, and until sixty (60) days after the announcement of the end of the national emergency (the “outbreak period”). These extensions could therefore potentially be significant.
Under the final rule, all group health plans, disability plans, employee welfare benefit plans, and qualified retirement plans subject to ERISA or the Code must disregard the outbreak period (March 1, 2020, through sixty (60) days after the announced end of the national emergency), when calculating the following benefit-related timeframes:
- The 30-day period to request HIPAA special enrollment,
- The 60-day period for electing COBRA continuation coverage,
- The date for making COBRA premium payments,
- The date for individuals to notify the plan of a COBRA qualifying event, and
- The date on which individuals may file a benefits claim, appeal of a benefits claim, or request external review under the plan’s claims procedures.
In connection with the extensions related to COBRA, the Department of Labor (“DOL”), on May 1, 2020, released FAQs and revised model COBRA notices (available here).
Notice, Loans, and Contributions Deadlines Extended
Also on April 29, 2020, the Departments jointly issued guidance for retirement plans extending certain deadlines in light of the COVID-19 pandemic, in Disaster Relief Notice 2020-01. Similarly to the final rule above, Notice 2020-01 extends certain deadlines and offers relief during the outbreak period (March 1, 2020, through sixty (60) days after the announced end of the COVID-19 national emergency):
- The Notice extends the notice and disclosure requirements under ERISA (including summary plan descriptions (“SPDs”), summary annual reports (“SARs”), qualified domestic relations order notices (“QDROs”), qualified default investment alternative notices (“QDIAs”), etc.), provided plan fiduciaries act in good faith and furnish the notice or disclosure as soon as administratively practicable under the circumstances.
- Despite ERISA’s strict deadlines on the time within which participant contributions and loan repayments must be forwarded to the plan (generally, within a few days), the Notice provides that DOL will not, solely on the basis of a failure attributable to the COVID-19 pandemic, take enforcement action against employers and service providers for a temporary delay in forwarding payments or contributions to the plan. The Notice cautions that employers and service providers must act reasonably, prudently, and in the interest of employees to comply with the deadlines as soon as administratively practicable. Note, too, that the IRS did not adopt similar non-enforcement relief for the potential excise tax liability that arises in connection with late contributions, so it’s important that employers, to the extent possible, comply with the contribution deadlines.
- The Notice also offers relief regarding plan loans and distributions. Specifically, if a retirement plan fails to follow the plan’s procedures related to plan loans or distributions, the DOL will not treat such failure as disqualifying if the failure is solely attributable to the COVID-19 outbreak and the plan administrator makes both a good-faith effort to comply with the requirements and a reasonable attempt to correct any deficiencies as soon as administratively practicable. Furthermore, the DOL will not treat any person as violating ERISA because the person made a loan or delayed loan repayments in compliance with the CARES Act (for more information regarding the extension of loans under the CARES Act, click here).
- Under previously-issued IRS Notice 2020-23, the deadline for filing Form 5500 for filings due between April 1, 2020, and July 14, 2020, was extended to July 15, 2020. While Notice 2020-01 did not grant an extension for Form 5500 filings for calendar year plans, Notice 2020-01 provides that Form M-1 filings for multiple employer welfare arrangements (MEWAs) are offered the same relief as in IRS Notice 2020-01. The failure to extend the due date for calendar year plans is likely due to the fact that such plans already have an option to extend the Form 5500 filing deadline to October 15, by filing IRS Form 5558 with the IRS before the plan’s normal deadline (July 31). Notice 2020-01 does, nonetheless, indicate that the Departments are continuing to monitor the COVID-19 outbreak and may issue further guidance as the calendar year filing deadline approaches.
- Notice 2020-01 also offers general guidance to employee benefit plans in light of the pandemic:
- Plans must act reasonably, prudently, and in the interest of the covered workers and their families.
- Plan fiduciaries should make reasonable accommodations to prevent the loss of benefits or undue delay in benefit payments.
- If an employer or service provider is unable to fully and timely comply with claims processing or other ERISA requirements due to the COVID-19 pandemic, the DOL’s enforcement approach will emphasize compliance assistance and include grace periods or other relief as appropriate.
These extensions and this guidance come as welcome relief to employers, but employers are cautioned against forming bad habits. Employers should continue to act reasonably, prudently, and otherwise comply with all fiduciary duties to the extent possible under the circumstances.