The COVID-19 Outbreak Period may be ending on February 28, 2021. The end of the Outbreak Period will terminate the Departments of Labor (DOL) and Treasury (collectively, the “Departments”) Outbreak Period Extensions for certain notice and payment deadlines. A new national emergency declaration issued by President Biden or an Outbreak Period extension by the Departments could delay the ending of the Outbreak Period deadline relief. Those affected by the deadline relief under the Outbreak Period Extensions should prepare for the possible ending of the Outbreak Period Extensions.
On April 28, 2020, the Employee Benefits Security Administration of the Department of Labor (EBSA) released Disaster Relief Notice 2020-01: Guidance Relief for Employee Benefit Plans Due to the COVID-19 Outbreak and a related news release. On May 4, 2020, The Departments published the final version of the Extension of Timeframe Rule (Rule), offering relief for certain deadlines during the COVID-19 public health outbreak (Outbreak Period).
Essentially, it permits all group health plans, disability, employee welfare benefit plans, and employee pension benefit plans subject to Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC) to suspend the following administrative deadlines:
- The 30-day period (or 60-day period, if applicable) to request Health Insurance Portability and Accountability Act (HIPAA) special enrollment when an individual or dependent loses other coverage, or a dependent is added due to birth, marriage, adoption, or placement for adoption;
- The 60-day election period for Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage;
- The deadline for making COBRA premium payments;
- The date for individuals to notify the plan of a qualifying event or determination of disability;
- The date within which individuals may file a benefits claim under the plan’s claims procedure;
- The date within which claimants may file an appeal of an adverse benefit determination;
- The date within which claimants may file a request for an external review; and
- The date within which a claimant may file information to perfect a request for external review upon a finding that the application was not complete.
The Rule tolls the administrative deadlines during what it calls the Outbreak Period.
The Rule defines the Outbreak Period as March 1, 2020, until sixty days after the announced end of the COVID-19 national emergency, as declared by President Trump under the Stafford Act (not the declared national emergencies proclaimed by President Trump under the National Emergencies Act or the Department of Health and Human Services’ declared “public health emergency” in relation to the COVID-19 pandemic).
According to the Departments and the Rule, they may provide additional relief as necessary.
However, the IRC and ERISA’s applicable sections may limit the extension of the Outbreak Period until one year from the national emergency’s declaration. Under the relevant sections of these regulations, the Departments may only disregard applicable statutory periods for one year. Accordingly, the Outbreak Period should end as of February 28, 2021, unless President Biden declares a new national emergency.
Though the rules appear to authorize the Departments to only disregard relevant time periods for one year, it is unclear whether the tolling relief expires at the end of this month.
The question posed to the Departments is whether all tolled periods restart for affected individuals when the outbreak period ends, or is the one-year limit a cap that is applied on a person-by-person basis? If the cap is on a person-by-person basis, each deadline that began on or after March 1, 2020, would be suspended for the duration of whichever period ends earlier; (1) one year from the date that the specific deadline would otherwise have begun, or (2) the Outbreak Period. Below is an example of how the different interpretations of the tolling period would operate in practice.
Employee A lost health coverage in June 2020, and their 60-day COBRA election period usually would have started on July 1, 2020. If the tolling periods restart for Employee A when the outbreak period ends, A’s 60-day COBRA election period begins on March 1, 2021 (when the one-year relief period expires). If the one-year limit is a cap that is applied on an individual-by-individual basis, A is entitled to additional time to elect COBRA because the tolling period would run for one year from the start of A’s election period on July 1, 2020 (if the outbreak period is extended). Note: in either scenario, Employee A must make a COBRA election and pay any retroactive COBRA premiums due for A’s COBRA coverage to be retroactive to their July 1, 2020 loss of coverage.
Although the Departments are aware of the above interpretive questions, plan sponsors and administrators will need to determine how to apply the tolling provision in the absence of direction if they have not yet issued guidance.
Plan sponsors should consult with their legal counsel about interpreting and preparing for the termination or extension of the Outbreak Relief Period.
EPIC offers this material for general information only. EPIC does not intend this material to be, nor may any person receiving this information construe or rely on this material as, tax or legal advice. The matters addressed in this document and any related discussions or correspondence should be reviewed and discussed with legal counsel prior to acting or relying on these materials.
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