IRS and EBSA Provide Additional Relief for Health and Retirement Plans and Participants Due to COVID-19

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 all health and retirement plans, with implications for governmental plans. In addition, EBSA issued independent guidance on April 28, 2020 for plans subject to the Employee Retirement Income Security Act ("ERISA").

EBSA and the IRS (together, "Agencies") filed a joint notice ("Joint Notice") extending numerous deadlines applicable to retirement and health plans subject to the ERISA. 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;
• Appeals of adverse benefit determinations;
• Requests for external review;
• COBRA election notices; and
• Benefit claims pursuant to a plan's claims procedures

The DOL has also issued EBSA Disaster Relief Notice 2020-01, granting delays and other relief to health and retirement plans related to:
 

• Notices, disclosures, and documents due under ERISA Title I during the national emergency
• Failures to follow verification procedures for plan loans
• Loans provided pursuant to the CARES Act
• Forwarding repayments of participant loans to a plan
• Form 5500 and Form M-1 filings

The Department of Health and Human Services ("HHS")—which has jurisdiction over non-federal governmental health plans and insurance issuers—concurred in the relief provided by the Joint Notice and EBSA Disaster Relief Notice 2020-01. HHS intends to offer similar relief for governmental plans and encourages governmental plans, states, and issuers to act in a manner consistent with the Joint Notice and Notice 2020-01.

Background

On March 13, 2020, President Trump declared a national emergency related to COVID-19 and separately determined that, under section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act ("Stafford Act"), a national emergency existed beginning March 1, 2020.

Section 518 of ERISA (29 U.S.C. § 1148) and Section 7508A of the Internal Revenue Code ("Code") permit the Agencies to, in the case of a Presidentially declared disaster under the Stafford Act, prescribe a period of up to 1 year to be disregarded for purposes of applying any deadline under ERISA or the Code.

Joint Notice

The Joint Notice is effective as of May 4, 2020, the day it was published in the Federal Register. The Agencies determined there was good cause to bypass the ordinary notice and public participation process to avoid undue delay contrary to the public interest. They noted that, as a result of the national emergency, participants and beneficiaries in employee benefit plans may encounter problems in exercising certain rights under those plans, and that sponsors of such plans will similarly have problems in the administration of the plans during the national emergency. Therefore, immediate relief is necessary.

The Joint Notice technically applies only to plans subject to ERISA and the Code. However, HHS—which has jurisdiction over non-federal governmental plans and insurance issuers—concurs with the Joint Notice's relief and intends to adopt a policy of measured enforcement to extend similar timeframes to non-federal governmental group health plans and insurers. HHS encourages governmental group health plans to provide relief similar to that granted in the Joint Notice, and encourages states and insurance issuers to enforce and operate, respectively, in a manner consistent with the Joint Notice.

Relief

The Joint Notice encompasses all of the following plans:
 

• Group health plans;
• Disability plans;
• Other employee welfare benefit plans; and
• Employee pension benefit plans (both defined contribution and defined benefit plans)

 
The Joint Notice designates a period of time, called the "Outbreak Period," that begins on March 1, 2020 and ends 60 days after the announced end of the national emergency under the Stafford Act. To the extent there are different Outbreak Period end dates for different parts of the country, the Agencies will issue additional guidance regarding the application of this relief. The examples in this article assume the national emergency ends on May 29, 2020, and that, therefore, the Outbreak Period ends on July 28, 2020.

The Joint Notice requires all plans to disregard the Outbreak Period for all participants, beneficiaries, qualified beneficiaries, and claimants for purposes of applying the following periods and dates:
 

1. Special Enrollment Periods. The 30-day (or 60-day, as applicable) period to request special enrollment.

Section 701(f) of ERISA (29 U.S.C. § 1181(f)) and Section 9801(f) of the Code specify various events that qualify an individual for a mid-year special enrollment period under a health plan, including loss of other coverage, termination of Medicaid or CHIP coverage, and having or becoming a new dependent. Qualifying individuals may request enrollment within 30 days (or 60 days, as applicable) of the qualifying event.
   

2. COBRA Election Periods. The 60-day election period for COBRA continuation coverage.

ERISA Section 605 (29 U.S.C. § 1165) and Code Section 4980B(f)(5) require that group health plans allow qualified beneficiaries to elect continuation coverage within an "election period," which begins by the date coverage terminates due to the qualifying event, is at least 60 days long, and ends, generally, at least 60 days after the date coverage terminates.
   

3. COBRA Premium Payment Deadlines. The date for making COBRA premium payments.

ERISA Section 606(2)(C) and (3) (29 U.S.C. § 1162(2)(C), (3)) and Code Section 4980B(f)(2)(B)(iii) and (C) require, generally, that premiums for COBRA coverage be paid within 30 days of the date due.
   

4. COBRA Notice of Qualifying Event. The date for notifying the plan of a qualifying event or determination of disability.

ERISA Section 606(a)(3) (29 U.S.C. § 1166(a)(3)) and Code Section 4980B(f)(6)(C) require that each covered employee or qualified beneficiary notify the plan administrator of certain qualifying events (divorce, loss of dependent status, and being determined to be disabled by Social Security) within, generally, 60 days of the date of the qualifying event.
   

5. COBRA Election Notice Deadlines. The date for providing a COBRA election notice.

ERISA Section 606(c) and Code Section 4980B(f)(6)(D) require plan administrators to notify qualified beneficiaries of their rights in the case of a qualifying event. Notification is generally required within 14 days of the date on which the plan administrator is notified.
   

6. Benefit Claims Deadlines. The date by which to file a benefit claim under a plan's claims procedure.

A plan's claims procedure, subject to DOL regulations, specifies the period in which an individual may file a benefit claim. This relief applies to all plans covered by the DOL's claims regulations, including, but not limited to, group health plans, disability plans, and retirement plans.
   

7. Appeals Deadlines. The date by which to appeal an adverse benefit determination.

A plan's claims procedure, subject to DOL regulations, specifies the period in which an individual may appeal an adverse benefit determination. The minimum period is 60 days (or 180 days for group health plans) following receipt of a notification of the adverse determination. This relief applies to all plans covered by the DOL's claims regulations, including, but not limited to, group health plans, disability plans, and retirement plans.
   

8. Deadlines for Requesting External Review. The date by which a claimant must file a request for external review after receiving an adverse benefit determination or final internal adverse benefit determination.

DOL and Treasury regulations require group health plans and insurers to allow claimants four months from the date of notice in which to request external review of an adverse benefit determination or final internal adverse benefit determination.
 

9. Deadlines for Perfecting Requests for External Review. The date by which a claimant must file information to perfect a request for external review after learning the request was incomplete.
   
   DOL and Treasury regulations require group health plans to allow claimants who have filed an incomplete request for external review of an adverse benefit determination or final internal adverse benefit determination to perfect their claim within the later of the four-month period for requesting review or the 48-hour period following notification of the missing materials.

EBSA Disaster Relief Notice 2020-01

On April 28, 2020, the DOL issued EBSA Disaster Relief Notice 2020-01, providing relief in a number of areas. While Notice 2020-01 technically applies only to plans subject to ERISA, HHS— which has jurisdiction over non-federal governmental plans and insurance issuers—concurs with the Joint Notice's relief and intends to adopt a policy of measured enforcement to extend similar timeframes to non-federal governmental group health plans and insurers. HHS encourages governmental group health plans and issuers to operate in a manner consistent with Notice 2020-01.
 
Deadlines for all Required Notices and Disclosures
 
The DOL will not consider a plan or fiduciary to violate ERISA for failing to furnish a notice, disclosure, or document that is required to be furnished by Title I of ERISA during the Outbreak Period if the plan and fiduciary:
 

• act in good faith; and
• furnish the notice, disclosure, or document as soon as administratively practicable under the circumstances.

The "Outbreak Period" is defined in the same way as it is defined for purposes of the Joint Notice, i.e., March 1, 2020 through 60 days after the national emergency is lifted.  Acting in "good faith" includes using electronic alternative means of communication with plan participants and beneficiaries that the fiduciary reasonably believes have effective access to electronic means of communication.
   
Verification Procedures for Plan Loans and Distributions
 
The DOL advises that it will not treat failures to follow a plan's verification procedures for loans or distributions during the Outbreak Period as failures if:
 

• The failure is solely attributable to the COVID-19 outbreak;
• The plan administrator makes a good-faith diligent effort to comply with the requirements; and
• The plan administrator makes a reasonable attempt to correct procedural deficiencies as soon as practicable.

Deadline for Adopting Loans and Distributions Permitted by CARES Act
 
ERISA Plans may operate in accordance with the loan and distribution provisions of Section 2202 of the CARES Act (which offers coronavirus-related distributions, increased loan limits, and delayed loan repayment) prior to adopting an amendment, provided the amendment is adopted by the last day of the first plan year beginning on or after January 1, 2022. This deadline is consistent with the deadline imposed by the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") and the IRS for amending plans for these provisions.
 
Plan Loans under CARES Act
 
The DOL will not treat any person as having violated the provisions of Title I of ERISA solely for providing loans, or delaying repayment of loans, in accordance with Section 2202(b) of the CARES Act. For more information about loans under the CARES Act, see our discussion here.
 
Deadline for Forwarding Participant Contributions and Loan Repayments to Plan
 
Under existing DOL guidance, participant contributions and loan repayments are considered plan assets and must be forwarded to the plan on the earliest date they can be reasonably segregated from general assets, and no later than the 15^th business day of the month in which paid to or withheld by the employer.
 
During the Outbreak Period, the DOL will not, solely due to a failure attributable to COVID-19, take enforcement action against a temporary delay in forwarding participant payments or contributions. Employers are advised to act reasonably, prudently, and in the interest of employees to forward the amounts as soon as administratively practicable.
 
Form 5500 and Form M-1
 
The DOL is providing relief with regard to the Form 5500 and Form M-1 that is identical to the relief provided by the IRS with regard to the Form 5500, which we discuss here. With respect to Forms 5500 due prior to July 15, 2020, the IRS delayed the deadline for those Forms 5500 to July 15, 2020.
 
The DOL's General Approach
 
The DOL made clear in Notice 2020-01 that, during the COVID-19 national emergency, the "guiding principle of plans must be to act reasonably, prudently, and in the interest of the covered workers and their families who rely on their health, retirement, and other employee benefit plans for their physical and economic wellbeing." Plan fiduciaries are expected to make "reasonable accommodations" to prevent the loss of benefits by participants and to "attempt to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established timeframes." The DOL's approach to enforcement during this time will be to emphasize compliance assistance while providing for grace periods and other appropriate relief.
 
For more information about IRS relief related to the COVID-19 pandemic and how it might affect your employee benefit plans, please contact Gary Blachman, Audra Ferguson-Allen, Rob Gauss, Melissa Proffitt, Kathleen Sheil Scheidt, Tara Sciscoe, Chris Sears, Lisa Erb Harrison, 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 should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.