What’s My Deadline Again? DOL Clarifies Extension of COVID-19 Outbreak Period Deadlines
Employers sponsoring employee benefit plans (specifically group health plans) may need to start tracking new deadlines. In EBSA Disaster Relief Notice 2021-01 (“Notice 2021-01”), the Department of Labor (“DOL”) provided guidance on the duration of the extension of certain benefit plan deadlines due to the COVID-19 pandemic. Many plan sponsors and plan administrators wondered whether the one-year extension for certain deadlines would expire on February 28, 2021, which is one year from the start of the presidentially-declared “outbreak period.” In Notice 2021-01, the DOL clarified that the one-year extension applies to individual deadlines on an individual-by-individual basis. However, plan-level deadlines (e.g., a 90 day run-out period after the end of the plan year) apply on a plan-level (vs. an individual) basis because these deadlines apply on a plan-level to all participants uniformly.
Last year, the DOL and IRS provided guidance stating that employee benefit plans must disregard the “outbreak period” when determining certain deadlines, such as deadlines for COBRA elections and premium payments, special enrollment in health plans, and the filing of claims and appeals (see our previous client alert here). The “outbreak period” is the period from March 1, 2020 until the date that is 60 days after the President’s national emergency declaration for COVID-19 expires. But under ERISA and the Internal Revenue Code, the government only has authority to issue deadline extensions of up to one year. The DOL clarifies in Notice 2021-01 that not every deadline extension will end on February 28, 2021.
The one-year extension generally applies on an individual-by-individual basis. As a result, an individual’s deadline will be “paused” until the earlier of one year from the date that the individual was first eligible for the relief, or 60 days after the expiration of the President’s national emergency declaration for COVID-19. This includes individuals who first become eligible for relief after February 28, 2021. Notice 2021-01 provides two examples that illustrate these rules:
- Assume that an individual’s original deadline to elect COBRA continuation coverage is March 1, 2020. The DOL and IRS guidance delays that deadline until February 28, 2021, which is one year from March 1, 2020.
- Assume that an individual’s original deadline to elect COBRA continuation coverage is March 1, 2021. The DOL and IRS guidance delays that deadline until the earlier of one year from that date (i.e., March 1, 2022), or the end of the “outbreak period.”
Note: In the government’s first example, the March 1, 2020 deadline is extended for one year until February 28, 2021. In the second example, the March 1, 2021 deadline is extended for one year until March 1, 2022. This may lead to some confusion. Our opinion is that the extension in the first example should be until March 1, 2021, not February 28, 2021. In other words, the relief ends at 11:59 pm on February 28, 2021 and as long as the individual elects COBRA continuation coverage by March 1, 2021, the election is timely.
Notice 2021-01 states that plan sponsors and plan administrators must act “reasonably” and in the interest of the employees and their families. As a result, the DOL suggests that a plan administrator “should” consider sending new notices to individuals whose relief period is ending. In addition, plan administrators “may need” to review notices that were sent to individuals before the issuance of Notice 2021-01 to ensure that individuals are aware of their rights and their deadlines, especially if those notices inaccurately communicated the end of the “outbreak period” as February 28, 2021. This may include notifying individuals who are losing health coverage that other coverage options may be available to them, such as the opportunity to obtain coverage through the Health Insurance Marketplace, most of which are offering a special enrollment period from February 15, 2021 to May 15, 2021.
While the DOL’s guidance in Notice 2021-01 is helpful, it certainly provides administrative challenges for plan sponsors and plan administrators who need to track individual deadlines on an individual-by-individual basis, and plan-level deadlines on a plan-level basis. We recommend that plan sponsors and plan administrators exercise caution and provide updated notices where appropriate.
If you have any questions, please contact one of the authors or another one of the Miller Johnson employee benefits attorneys.