To reduce the risk that participants will lose benefits during the COVID-19 outbreak because they fail to meet certain procedural requirements, the U.S. Departments of Labor and the Treasury announced the extension of a number of benefits-related deadlines. In addition, the U.S. Department of Labor issued EBSA Disaster Relief Notice 2020-01, which offers certain relief to plan sponsors and fiduciaries with regard to notices and disclosures to plan participants and beneficiaries.
Generally, the rules that extend deadlines for individuals require plans that are subject to ERISA or the Internal Tax Code to disregard the period between March 1, 2020, until 60 days after the announcement of the end of the COVID-19 National Emergency. The deadlines subject to this extension include:
- Special enrollment election periods
- COBRA periods for election, payment, individual notice of qualifying event, and determination of disability
- Periods for filing a claim or appeal (internal or external) or to perfect a request for an external appeal
The period for a plan to provide a COBRA election notice has also been extended.
As a result of this guidance, certain periods for taking action that have expired (or would ordinarily expire) will be extended. For example, suppose it is announced on June 1, 2020, that the National Emergency has ended. The sixty-day period in the guidelines would end July 31, 2020. An employee whose employment (and health coverage) terminated on March 31, 2020, would have sixty days from August 1 (or until September 28) to make an election under COBRA.
The guidance recognizes that the National Emergency may end at different times in different areas of the country, which may affect when the extension period ends. However, by law, the extension will not last more than one year.
Similarly, the EBSA Disaster Relief Notice 2020-01 provides that an employee benefit plan and its plan fiduciaries will not be liable for violating ERISA if the plan fails to furnish a notice, disclosure, or other document that is required to be furnished between March 1, 2020, and 60 days after the announcement of the end of the COVID-19 National Emergency, provided that the plan acts in good faith and furnishes the notice or other document as soon as administratively practicable under the circumstances. The Notice explains that good faith acts may include the use of electronic means to communicate with plan participants who the plan sponsor reasonably believes have access to electronic communication through media such as email, text messages, or websites.
The Notice also provides relief to retirement plans that fail to follow certain procedural requirements related to plan loans or distributions that are required by the plan document, provided that the failure is solely attributable to the COVID-19 outbreak, the plan administrator makes a good-faith effort under the circumstances to comply with the applicable requirements, and the plan administrator makes a reasonable attempt to correct any procedural deficiencies as soon as administratively practicable. Note that this relief does not apply to the regulatory requirements imposed by the Department of Treasury, such as the requirement to receive spousal consent.
The Notice provides additional relief to employers who may face difficulty forwarding participants’ contributions and loan repayments to a retirement plan in a timely manner. Current regulations require that employers forward these contributions and loan repayments as soon as the earliest date in which the amount can be reasonably segregated from the employer’s general assets, but “in no event later than the 15th business day of the month following the month in which the amounts were paid to or withheld by the employer.” The Notice provides that the Department will not take enforcement action if employers cannot forward the contributions in a timely manner as long as the delay is attributable solely to the COVID-19 outbreak and the employer “acted reasonably, prudently and in the interest of employees to comply as soon as administratively practicable under the circumstances.”