Emily R. Langdon402.978.5386
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Given this notice, employee benefit plans, third-party administrators (“TPAs”), insurers, and COBRA administrators may have to reconsider their administrative practices.
The original Joint Notice from the DOL and IRS, issued May 4, 2020, required that health and retirement plan toll a number of deadlines for individuals during the COVID-19 National Emergency, plus a 60-day period (the “Outbreak Period”) starting March 1, 2020. (read our article overviewing this notice for more information)
However, as described in the Joint Notice, the Employee Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (“IRC”) limit the DOL’s and Treasury’s ability to toll deadlines to one year (the “Tolling Period”).
The deadlines impacted by the Joint Notice are as follows:
Although the government has issued disaster relief guidance in the past, such periods have not run into the statutorily-imposed one-year limit. Thus, the COVID-19 extension has entered new territory and generated many requests for guidance.
In Notice 2021-01, the DOL coordinated with the Department of Health and Human Services (“DHHS”) and the IRS, and the agencies are interpreting the Tolling Period to be read on a person-by-person basis.
Specifically, the DOL says that the Tolling Period ends upon the earlier of:
Accordingly, each individual has his or her own Tolling Period.
For instance, a COBRA Qualified Beneficiary has 60 days to elect COBRA, counted from the later of their loss of coverage or the date his or her COBRA election notice is provided. Under the Joint Notice, a Qualified Beneficiary’s 60-day deadline was tolled as of March 1, 2020, until the end of the Outbreak Period (e.g, until the end of the National Emergency plus 60 days). At the end of the Outbreak Period, the deadlines would start running again, and the Qualified Beneficiary would have his or her normal 60-day COBRA election period (or the balance of his or her election period if such period started before March 1, 2020).
However, upon the one-year expiration, Notice 2021-01 states that the one-year period does not end on February 28, 2021, for all individuals, but rather each individual has his or her own one-year Tolling Period.
The following examples illustrate the new rules:
For each of the above examples, the tolling would end earlier if the National Emergency ends. In that case, the election period would end 60 days after the end of the National Emergency.
As indicated in Notice 2021-01, the DOL recognizes that enrollees may continue to encounter COVID issues, even after the one-year Tolling Period expiration. The “guiding principle” is for plans to act reasonably, prudently, and in the interest of the workers and their families. Accordingly, plan fiduciaries should make reasonable accommodations to prevent the loss of or undue delay in payment of benefits and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames.
This article has been prepared for general information purposes and (1) does not create or constitute an attorney-client relationship, (2) is not intended as a solicitation, (3) is not intended to convey or constitute legal advice, and (4) is not a substitute for obtaining legal advice from a qualified attorney. Always seek professional counsel prior to taking action.