COVID-19 Extensions Are Not Mandatory for Governmental Plans
On May 4, 2020, the Employee Benefits Security Administration ("EBSA") in the Department of Labor ("DOL") and the Internal Revenue Service ("IRS") issued new guidance on delays due to COVID-19 affecting health and retirement plans. EBSA and the IRS published in the Federal Register a joint notice ("Joint Notice") extending numerous deadlines applicable to retirement and health plans subject to the Employee Retirement Income Security Act ("ERISA"). The extensions are mandatory for ERISA plans. The Joint Notice requires plans to disregard the period beginning March 1, 2020 and ending 60 days after the COVID-19 national emergency terminates in determining deadlines for special enrollment, COBRA 60-day election periods, COBRA premium payments, filing benefits claims and appeals, and requests for external review. We provided a detailed analysis of the Joint Notice in an
earlier e-alert.
On May 14, the Department of Health and Human Services ("HHS") (which is the federal agency that enforces group health plan mandates for non-Federal governmental plans) released a
memorandum making clear that non-Federal governmental plans are
not required to adopt the extensions outlined in the Joint Notice. Nevertheless, HHS encourages sponsors of such plans to provide relief to participants similar to the relief described in the Joint Notice.
In the memorandum, HHS indicated that it "concurs" with the relief in the Joint Notice. HHS stated that:
Between March 1, 2020 and 60 days after the end of the COVID-19 National Emergency, or such other date announced by DOL or jointly by DOL and the Treasury Department/IRS in future guidance, CMS will adopt a temporary policy of relaxed enforcement to extend similar time frames otherwise applicable to non-Federal governmental group health plans and health insurance issuers offering coverage in connection with a group health plan, and their participants and beneficiaries, under applicable provisions of title XXVII of the Public Health Service Act (PHS Act).
Rather than mandating affirmative extensions to plan participants like the Joint Notice did for participants in ERISA plans, HHS has taken the position that it will not consider a non-Federal governmental plan to be in violation of the Public Health Service Act if a non-Federal governmental plan voluntarily decides to grant the extensions described in the Joint Notice. HHS nonetheless encourages plans to grant the extensions. It wrote:
While the extension of time frames is not mandatory for non-Federal governmental plans, CMS encourages plan sponsors of non-Federal governmental plans to provide relief to participants and beneficiaries similar to that specified in the Joint Federal Register Notice . . .
As a result of this clarity, non-Federal governmental plans do not have to implement any of the extensions set out in the Joint Notice. This provides sponsors of such plans with flexibility to provide appropriate relief to plan participants while maintaining sound administrative and fiscal control over their plans. To the extent a plan sponsor of a non-Federal governmental plan chooses to adopt one or more of these extended deadlines, plan participants should be notified of applicable relief. Consistent with the aims of the Joint Notice and the shared goals of the regulatory agencies (including HHS), we think it is prudent to provide a communication that outlines the extensions adopted, with contact information for additional questions and assistance.
For more information about the HHS memorandum and other relief related to the COVID-19 pandemic and how it might affect your employee benefit plans, please contact
Audra Ferguson-Allen,
Rob Gauss,
Tara Sciscoe,
Chris Sears,
Lisa Erb Harrison,
Shalina Schaefer,
Raven Merlau,
Lindsay Knowles,
Austin Anderson, or the Ice Miller LLP
Employee Benefits attorney with whom you work.
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.