COVID-19 Relief for Employee Benefit Plans, Participants, and Beneficiaries Continued for Limited Time

The Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) has released Disaster Relief Notice 2021-01 providing guidance on the duration of COVID-19-related relief previously provided by 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 (Joint Notice) issued in 2020 by the DOL, Treasury Department, and the IRS (collectively the “Notices”).

In March 2020, the President declared a national emergency effective March 1, 2020, due to the COVID-19 outbreak. ERISA and the Internal Revenue Code permit the Secretaries of Labor and Treasury to prescribe a period of up to one year that may be disregarded in determining the date by which any action is required or permitted to be completed. The Notices provide relief until 60 days after the announced end of the COVID-19 National Emergency or such other date as announced by the relevant agency.

Therefore, the DOL, in coordination with the Treasury, IRS, and Department of Health and Human Services (HHS), announced in Notice 2021-01 that “individuals and plans with timeframes that are subject to the relief under the Notices will have the applicable periods under the Notices disregarded until the earlier of

  • one year from the date they were first eligible for relief, or
  • 60 days after the announced end of the National Emergency.”

Based on this, the period of time to be disregarded is not a fixed period of time that runs from March 1, 2020, until February 28, 2021. Rather, the period of time to be disregarded is calculated individually for each individual or plan action.

Example 1

If a qualified beneficiary would have been required to make a COBRA election by March 1, 2020, the Joint Notice delays that requirement until February 28, 2021, which is the earlier of one year from March 1, 2020, or the end of the outbreak period (which remains ongoing).

Example 2

If a qualified beneficiary would have been required to make a COBRA election by April 30, 2020, the Joint Notice delays that election requirement until one year from that date (i.e., April 30, 2021).

The Notice states “that plan fiduciaries should make reasonable accommodations to prevent the loss of or undue delay in payment of benefits … and should take steps to minimize the possibility of individuals losing benefits.” By way of example, the Notice states that plan administrators should

  • affirmatively notify participants and beneficiaries who risk losing protections because of the end of the relief period;
  • update or amend and reissue plan disclosures that have provided no longer accurate information as to when action is required to be taken (e.g., COBRA election notices or claims procedure notices); and
  • make participants who are losing group health coverage aware of options available to them, including the Health Insurance Marketplace special enrollment period from February 15 through May 15, 2021.

The DOL recognizes that plans and service providers may not be able to fully and timely comply with ERISA disclosures and claims processing requirements. This includes disruptions due to pandemic and natural disasters to a plan or service provider’s principal place of business that makes compliance impossible. The DOL states that when fiduciaries have acted in good faith and with reasonable diligence under the circumstances, DOL enforcement will be handled with an emphasis on compliance assistance, including grace periods and other relief.