The Department of Labor (DOL) and Internal Revenue Service (IRS) issued guidance at the end of April intended to extend deadlines and recognize the difficulties of employee benefit plan compliance during the public health emergency for COVID-19 and to provide guidance for plan participants and employees. The guidance, issued in three forms, is highlighted below. In addition, on May 1, 2020, the DOL issued revised model COBRA notices and election forms which are designed to provide additional information for Medicare-eligible individuals.

Common to the guidance is the concept of an Outbreak Period. The Outbreak Period started March 1, 2020 and ends 60 days after the end of the National Emergency declared on March 13, 2020, a date that is not yet certain. It is possible that there may be different ending dates, depending on region or other factors. If so, the agencies committed to issue further guidance.

Deadline Extensions for Participants

The DOL and IRS jointly issued a notice with rules for delaying certain deadlines on account of the COVID-19 public health emergency. Deadlines that occur during the Outbreak Period are tolled during the Outbreak Period.

The extensions apply to all health plans, disability plans, welfare benefit plans and employee pension plans (including 401k plans).

The deadlines that are tolled by the Outbreak Period are:

• COBRA – election, payment and notification of qualifying event
• HIPAA – special enrollment periods and elections
• Health plan external review process
• Claims procedures – making a claim, appeals and other deadlines in claims procedures

The extensions operate as a tolling, disregarding the Outbreak Period in the determination of any deadline. For example, if an employee’s child is born March 1 and the employee would normally have 30 days to enroll the child in the health plan, the employee would have 30 days after the end of the Outbreak Period to enroll the child and the health plan or insurer could not deny coverage.

One of the most significant effects will be the tolling of COBRA deadlines for election and payment. Because the Outbreak Period started March 1, 2020, employees who could have elected and/or paid for COBRA continuation coverage during the Outbreak Period will have additional time to make elections and payments and insurance companies and self-funded plans will not be able to deny coverage. Employers should consult with their health plan providers to understand how the extensions will affect their group health and other plans.

Guidance and Relief for Employee Benefit Plans

The DOL, confirming concurrence with Health and Human Services (HHS) for non-federal governmental health plans, announced extensions for notices and other required communications that plans must provide to participants and others. If a notice, disclosure or other document would be required to be provided during the Outbreak Period described above, the plan and fiduciaries are to act in good faith and deliver these as soon as administratively practical under the circumstances. Good faith can include email, texts and continuous access websites if it is reasonable to believe the participants, beneficiaries or employees have effective access to the electronic means. Many believe that this is a signal from the DOL that there may be some easing on the restrictions for electronic delivery that have been in place.

Specifically for defined contribution plan loans and distributions, where verification or other procedures (but not spousal consent or other statutory requirements governed by the IRS) are not fully complied with, the Department will not treat the non-compliance as a failure if:

• that failure is solely attributable to the COVID-19 outbreak;
• the plan administrator makes a good-faith diligent effort under the circumstances to comply with those requirements; and
• the plan administrator makes a reasonable attempt to correct any procedural deficiencies, such as assembling any missing documentation, as soon as administratively practicable.

As a result, employers and plan administrators should document compliance efforts and corrective actions.

With respect to CARES Act loans (up to $100,000/100% of account) and CARES Act loan extensions, the DOL has indicated that it will not treat these loans and loan extensions as failing the reasonably equivalent or adequate security requirements of ERISA.

The DOL will not take enforcement action in connection with an employer’s failure to timely deposit employee contributions in a plan due to COVID-19 during the Outbreak Period, as long as the employer has acted reasonably, prudently, and in the interests of the participants. Again, employers should document late contributions to 401(k) and other plans and the reasons for the failure that are related to COVID-19.

An employer does not need to provide a blackout notice in advance of plan changes during the Outbreak Period, and can provide such notice as soon as practicable without any written determination by the fiduciary that the failure to provide 30 days advance notice is beyond its control.

The DOL announced its general enforcement approach: “ Our approach to enforcement will emphasize compliance assistance and include grace periods and other relief where appropriate, including when physical disruption to a plan or service provider’s principal place of business makes compliance with pre-established timeframes for certain claims decisions or disclosures impossible.”

DOL FAQs for Participants

The DOL issued Frequently Asked Questions (FAQs) directed at employees which reflect common concerns and practical answers.

One set of FAQs is directed particularly at those whose employer may temporarily close or who may lose health coverage for a variety of reasons, pointing out that some issues may be ameliorated by the extensions described above. One FAQ identifies options when an employee may be losing health coverage: (i) COBRA; (ii) special enrollment in another health plan (e.g., spouse’s plan); (iii) special enrollment at HealthCare.gov; and (iv) health coverage through a government program such as CHIP or Medicaid.

Other FAQs are directed at employee pension plan questions about distributions, contributions, changes and access to information. Most FAQs end with a suggestion that if the employer, plan administrator or fiduciary cannot supply the information needed, the employee can contact the DOL at www.askebsa.dol.gov.