Employers that sponsor health and welfare plans governed by ERISA must once again review their plans to consider the impact of new COVID-19 guidance1 issued by the US Department of Labor (DOL) and the Internal Revenue Service.
The guidance provides relief to plan participants by extending deadlines for participant claims and appeals, special enrollment election windows, COBRA elections and premium payments, and notification of qualifying events or a determination of disability. Fortunately, the guidance also extends the deadline for plans to furnish certain notices and disclosures to plan participants and beneficiaries. These extensions, which are effective retroactive to March 1, 2020, have a significant impact on health and welfare plans, which are facing unique plan design and administration challenges as a result of COVID-19.
The guidance also relaxes electronic disclosure standards and DOL enforcement efforts during the pandemic. Individuals who operate employee benefit plans should be mindful that plan fiduciaries have ongoing compliance obligations to plan participants during this relief period.
Relief Applies During Outbreak Period
Recognizing that COVID-19 creates unique compliance hurdles for plan sponsors, the agencies extended certain deadlines under ERISA and the Internal Revenue Code from March 1, 2020 through 60 days after the announced end of the COVID-19 national emergency (or, a later date established by future guidance) (the Outbreak Period).
For example, if the end of the COVID-19 national emergency is announced on May 31, 2020, the relief would apply through July 30, 2020. In this example, the Outbreak Period would run from March 1, 2020 through July 30, 2020, and the entire period between March 1, 2020 and July 30, 2020 is disregarded when determining whether a plan or participant has complied with certain deadlines.
Plans Subject to Relief
The guidance broadly applies to group health plans, disability and “other employee welfare benefit plans,” and employee pension benefit plans subject to ERISA or the Internal Revenue Code. This includes, but is not limited to, the following types of plans:
- Medical, dental, vision, and prescription drug plans
- Short and long-term disability plans
- Life and accidental death and dismemberment plans
- Health flexible spending account plans (health FSAs)
- Health reimbursement arrangements (HRAs)
- On-site daycare
- Legal assistance plans
The guidance does not apply to the following types of employee benefit plans and programs:
- Dependent care flexible spending accounts (dependent care FSAs or DCAPs) that only pay or reimburse an employee’s off-site childcare expenses
- Statutory disability programs provided solely to comply with state law
- Health savings accounts (HSAs)
- Adoption assistance programs
- Commuter benefit plans
- Tuition assistance programs
Other benefit plans and programs may be impacted depending on whether the plan offers an ERISA benefit, such as:
- Wellness programs
- Disease management programs
- On-site medical clinics that provide medical care beyond first-aid
In certain instances, plan amendments may be necessary or advisable to extend plan deadlines. For example, an employer that offers both a health FSA and a dependent care FSA under the same plan (such as a cafeteria or flexible spending account plan) typically applies the same claims deadline for each account. Such an employer should consider amending the plan to extend the claims deadline for both the health FSA and the dependent care FSA. Otherwise, the plan would have a different claim deadline for each flexible spending account—the pre-existing claim deadline for the dependent care FSA, and the new automatically extended deadline for the health FSA.
Deadlines Extended During Outbreak Period
During the Outbreak Period, plans are required to extend the following deadlines for plan participants:
- The 30-day period (or the 60-day period applicable to Medicaid/CHIP-related special enrollment events) within which a participant must make a HIPAA special enrollment election
- The 60-day COBRA election period
- The due date for COBRA premium payments
- The date by which participants and beneficiaries must notify the plan of a qualifying event or disability determination
- The date by which participants and beneficiaries must file a benefit claim under the plan’s claims procedures
- The date by which participants and beneficiaries must appeal an adverse benefit determination
- The date by which participants and beneficiaries must request external review (or, perfect a request for external review that a plan previously determined to be incomplete)
The deadline extension for HIPAA special enrollment elections, COBRA elections, and COBRA premium payments will have a significant impact on health and welfare plan sponsors in the coming months:
- HIPAA special enrollment election extension: Any employee who experiences a HIPAA special enrollment event (e.g., when an employee loses other health coverage or gains a new dependent by birth, marriage, or adoption) on or after March 1, 2020 will have 30 days after the end of the Outbreak Period to enroll in the employer’s medical plan (60 days for Medicaid/CHIP special enrollment events).
- A special enrollment election for birth or adoption made within 30 days after the end of the Outbreak Period would cover the employee and dependent(s) retroactive to the date of the birth or adoption. However, in the case of special enrollment due to loss of other coverage and marriage, existing law does not require plans to enroll individuals in coverage prior to the first day of the month following the date the plan received the employee’s special enrollment request. The new COVID-19 guidance only extends the 30-day timeframe for employees to make a special enrollment election and does not modify the coverage effective date for loss of other coverage and marriage special enrollment events. Therefore, it appears the coverage effective date for loss of other coverage and marriage special enrollment events can still be the first day of the month following the receipt of an employee’s special enrollment election.
- COBRA election extension: Any employees who lose their employer-sponsored group health plan coverage due to a COBRA-qualifying event, including a reduction in hours or change in employment status (such as a layoff or furlough), will have 60 days after the end of the Outbreak Period to elect COBRA coverage. COBRA coverage would apply retroactive to the date active coverage was lost due to the COBRA qualifying event.
- COBRA notice of qualifying event extension: Plan participants who experience a disability determination that extends the maximum COBRA coverage period or who have an enrolled dependent who no longer qualifies for plan coverage due to divorce, legal separation, or loss of dependent status must notify the plan of the qualifying event within 60 days after the end of the Outbreak Period.
- COBRA premium payment extension: COBRA participants and beneficiaries will not be required to make COBRA premium payments until 30 days after the end of the Outbreak Period. Plans and insurers cannot deny coverage due to nonpayment of COBRA premiums during the outbreak period. If a participant elects COBRA, the plan must cover the participant’s benefits and services retroactive to the date of the COBRA qualifying event. If a participant does not pay COBRA premiums that accumulated during the Outbreak Period within 30 days after the end of the Outbreak Period, the plan is not required to cover benefits and services incurred during the months COBRA is not paid for.
During the Outbreak Period, plans may (but are not required to) extend the following deadlines:
- The date by which group health plans must provide COBRA election notices
- Generally, the COBRA administrator must provide the COBRA election notice to group health plan participants within 14 days from the date the COBRA administrator receives notice of a COBRA-qualifying event. This includes a COBRA qualifying event due to reduction in hours or change in employment status that causes a loss of employer-provided group health plan coverage (such as medical, dental, vision, health FSAs, and some employee assistance programs (EAPs)).
- This COBRA election notice distribution relief will primarily benefit employers that have not outsourced COBRA administration and may face compliance challenges due to COVID-19 business disruptions. Employers that have outsourced group health plan administration should coordinate with their COBRA vendors to determine whether the vendor will continue providing COBRA election notices within 14 days of a qualifying event or whether the vendor will take advantage of the Outbreak Period relief.
- Applicable deadlines for furnishing notices, disclosures, and “other documents” required by Title I of ERISA are also extended during the Outbreak Period. This includes but is not limited to:
- Summary plan descriptions and summaries of material modifications
- Summary annual reports
- Plan documents requested by participants and beneficiaries
- Notification of claim determinations (including explanation of benefits (EOBs))
- Appeal and adverse benefit determination notices
- Qualified medical child support order (QMCSO) notices
Relaxed Electronic Disclosure Standard
During the Outbreak Period, plan sponsors can take advantage of a relaxed electronic disclosure standard when distributing required notices, disclosures, and documents to plan participants. The plan and responsible fiduciary must act in “good faith” and furnish the notice, disclosure, or document as soon as administratively practicable under the circumstances. The guidance clarifies that “good faith” acts include the use of email, text messages, and continuous access websites to communicate with plan participants. This is a significant departure from existing DOL electronic disclosure guidance, which states a participant should have work-related computer access or, alternatively, consent to electronic disclosure before ERISA-required plan notices and disclosures are provided electronically.
Relaxed DOL Enforcement Activity
The guidance clarifies that the DOL’s enforcement efforts during the Outbreak Period will focus on “compliance assistance” and will include grace periods and other relief where appropriate. However, the guidance emphasizes that plan fiduciaries should make reasonable accommodations to prevent the loss or delay of benefits to plan participants. The guidance states that relaxed enforcement efforts will apply when a plan or plan service provider’s principal place of business is disrupted to the degree it makes compliance with pre-established deadlines for plan decisions and required disclosures impossible.
Since the majority of businesses have been deemed non-essential under state and local directives—and even essential businesses have maximized remote work where possible—we anticipate that virtually all employers will have experienced a disruption to their principal place of business. The question of whether the disruption to physical operations makes compliance with plan decision and disclosure deadlines “impossible” is one that should be considered with legal counsel to minimize fiduciary risk.
Employer Action Steps
Employers need to review their benefit programs and consult with legal counsel to determine which of their employee benefit plans are impacted by this guidance.
Employers with fully insured benefits should contact their insurance carriers and brokers for detailed information about the impact of this guidance on the administration of their group insurance policies. Employers that maintain self-insured plans have control over the terms of their plans, but still need to coordinate with third-party claims administrators to ensure proper administration of extended plan deadlines. Employers that administer COBRA in-house should review their COBRA notices and COBRA administration process to determine what changes need to be made to comply with the extended COBRA deadlines.
Plan fiduciaries should carefully consider whether extending pre-established deadlines for plan decisions and required plan disclosures is necessary based on disruption to the plan’s physical operations. Ultimately, these decisions and disclosures must be made as soon as administratively possible.
1The guidance consists of a final rule issued by the US Departments of Labor and Treasury, a notice issued by the Employee Benefits Security Administration (EBSA Notice 2020-01), available at, and COVID-19 FAQs for Participants and Beneficiaries.
If you have any questions regarding the content of this alert, please contact Alexandra Lugo, associate, at alugo@barclaydamon.com or another member of the firm’s Employee Benefits Practice Area.
We also have a specific team of Barclay Damon attorneys who are actively working on assessing regulatory, legislative, and other governmental updates on non-trademark-related COVID-19 matters and who are prepared to assist clients. You can reach our COVID-19 Response Team at COVID-19ResponseTeam@barclaydamon.com.