Agencies Provide COVID-19-Related Extension for Numerous Benefit Plan Deadlines

On April 28, 2020, the U.S. Department of Labor (DOL) and the Internal Revenue Service issued a new final rule and additional guidance that together extend numerous deadlines under ERISA and the Internal Revenue Code (Code) that apply to group health plans, retirement plans, and participants in those plans (Extension Guidance). The extensions, which are being enacted in response to the COVID-19 pandemic and pursuant to the authority granted to the DOL by the CARES Act, promise to have a significant impact on employers’ administration of various benefit plan requirements, such as administration of benefit plan claims and appeals, COBRA continuation coverage and mid-year special enrollment in group health plan coverage.

Here are a few highlights of the Extension Guidance:

  • The Outbreak Period. All benefit plan deadlines that are identified in the Extension Guidance are effectively tolled during the “Outbreak Period” defined in the guidance. The Outbreak Period starts March 1, 2020, and ends 60 days after the announced end of the COVID-19 National Emergency. As an example, if the National Emergency ends on May 15, 2020, the Outbreak Period will end on July 14, 2020.
  • Benefit Plan Deadlines. Deadlines for the following benefit plan actions are impacted by the Extension Guidance:
    • Requesting special enrollment in a group health plan. (ERISA 701(f); Code 9801(f))
    • Providing the COBRA election notice to COBRA-qualifying beneficiaries. (ERISA 606(c); Code 4980B(f)(6)(D))
    • Electing COBRA continuation coverage. (ERISA 605; Code 4980B(f)(5))
    • Making COBRA premium payments. (ERISA 602(C); ERISA 603; Code 4980B(f)(2)(B)(iii); Code 4980B(f)(2)(C))
    • Notifying the plan of a COBRA-qualifying event or a determination of Social Security disability for COBRA purposes. (ERISA 606(a)(3); Code 4980B(f)(6)(C))
    • Filing a benefit claim or an appeal of an adverse benefit determination under the plan’s claims and appeals procedures. (29 CFR 2560.503-1)
    • Requesting external review of an adverse benefit determination or final internal adverse benefit determination under a medical plan. (29 CFR 2590.715-2719(d)(2)(i); 26 CFR 54.9815-2719(d)(2)(i))
    • Filing information to perfect a request for external review. (29 CFR 2590.715-2719(d)(2)(ii); 26 CFR 54.9815-2719(d)(2)(ii))
  • The Extension Guidance includes some examples that offer a glimpse into how the Outbreak Period will impact benefit plan administration. Here are two examples, using an assumed Outbreak Period of March 1, 2020 – July 14, 2020:
    • COBRA-Qualifying Event – Participant Election. An employee whose hours are reduced during the Outbreak Period and has a COBRA-qualifying event will have until September 12, 2020 (60 days after the last day of the Outbreak Period) to elect COBRA continuation coverage.
    • Disability Plan Appeal Request. An employee who receives a disability plan claim denial decision during the Outbreak Period will have until at least January 10, 2021 (180 days after the last day of the Outbreak Period) to file an appeal of the claim denial. If the disability plan provides for a longer period than 180 days to file appeal requests, the deadline will be later (e., the plan’s internal deadline will begin to run on the last day of the Outbreak Period).

The implications of the Extension Guidance are far-reaching. Employers will need to consider how the extensions affect many routine benefit administration practices, such as whether a participant’s health plan claims are pended during the participant’s COBRA election period and how the employer’s health plan collects COBRA premiums. Faegre Drinker is continuing to review the Extension Guidance and will provide additional considerations for employee benefit plan sponsors in future client alerts. Please don’t hesitate to contact your Faegre Drinker attorney with questions at any time.

The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.

About Author: Monica Novak

Monica Novak counsels tax-exempt and for-profit clients on the complex and diverse array of statutes and regulations that apply to employee benefit plans and executive compensation arrangements. She provides guidance and support in designing compliant benefit programs, and assists clients with corrective actions when appropriate to ensure ongoing legal compliance. Monica also represents clients in negotiating stock and asset purchase agreements and merger agreements, resolving potential benefit plan liabilities and integrating benefit plans in the aftermath of acquisitions. View all posts by , and

About Author: Dawn Sellstrom

Dawn Sellstrom focuses her employee benefits practice on health and welfare benefits. Dawn advises employers on health and welfare benefits of all types, and on compliance under the Employee Retirement Income Security Act (ERISA), Internal Revenue Code, Health Insurance Portability and Accountability Act (HIPAA), and related federal and state laws and regulations. She has significant experience assisting employers with health care reform strategy and compliance, consumer-driven health care arrangements, and health and welfare plan governance, including plan design and fiduciary responsibilities. View all posts by , and

About Author: Sarah Bassler Millar

Sarah Bassler Millar counsels employer plan sponsors and service providers on the design, implementation, and administration of health and welfare benefits, retirement plans and nonqualified plans. She routinely advises on fiduciary governance matters, including current best practices and the implications of the prohibited transaction rules. When counseling clients, she focuses on identifying solutions that effectively mitigate risks and manage identified compliance issues, while taking into account the client’s employee recruitment and retention goals. Sarah formerly led the firm’s benefits and executive compensation group. View all posts by , and

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