Updates on COVID-19-Related Deadline Extensions for Healthcare Benefits
March 26, 2021
Recently, the U.S. Department of Labor (DOL) issued EBSA Disaster Relief Notice 2021-01, a communication especially of interest to employers. The notice clarifies the duration of COVID-19-related deadline extensions applying to healthcare benefit plans.
The DOL and the Internal Revenue Service (IRS) issued guidance last year stating that the COVID-19 outbreak period – defined as starting March 1, 2020, and commencing 60 days following the announced end of the COVID-19 national emergency – is to be disregarded when calculating deadlines under COBRA, ERISA and HIPAA’s special enrollment provisions.
While the initial emergency declaration was set to expire on March 1, 2021, it was recently extended. Despite the fact the DOL and IRS defined the outbreak period based on the COVID-19 national emergency, they relied on statutes that allowed for specifying disregarded periods for a maximum of a year. As a result, there was confusion as to whether the outbreak period was required to end on Feb. 28, 2021, a year after it started.
The new notice offers clarity on the period by confirming the extensions have continued past Feb. 28 and will be addressed on a case-by-case basis. Applicable deadlines for individuals and plans falling within the outbreak period will be extended until the earlier of these two scenarios:
- One year from the date the plan or individual became eligible for outbreak period relief, or
- The end of the outbreak period.
After the disregarded period concludes, the previously disregarded timeframes will carry on. The outbreak period will resume until after 60 days of the end of the national emergency, but the maximum disregarded period for calculating important deadlines for individuals or plans cannot exceed a year.
Communication is Critical
The DOL recommends plan sponsors send notices to participants clarifying the end of the relief period. This may consist of reissuing or updating previous disclosures that are no longer effective. Sponsors are also instructed to alert participants who are losing coverage of other health coverage options, such as through the COVID-19 special enrollment period in the Health Insurance Marketplace.
The new notice confirms that the ongoing pandemic and resulting circumstances may affect normal plan operations. The DOL reassures that enforcement will emphasize compliance assistance and other relief to fiduciaries acting in good faith and with reasonable diligence. The notice also states that the IRS and the U.S. Department of Health and Human Services agree with the guidance and how it is applied to laws under their respective jurisdiction.
While plan sponsors and administrators may welcome this new notice, they may also be disappointed in its timing and clarification of the one-year limitation. Determining the disregarded period on an individual basis could create considerable administrative challenges. Plan sponsors and administrators should take a proactive approach to develop a strategy to share these complicated rules with their participants.