The Department of Labor (together with the Treasury Department) has issued helpful deadline relief for participants and beneficiaries in health, disability, other welfare and pension plans, as well as for plan sponsors and administrators of such plans, during the COVID-19 National Emergency. The guidance came just in time for plan administrators at risk of missing the deadline for distributing annual funding notices, which was April 29 this year.
First, the DOL and Treasury yesterday published in the Federal Register a notification announcing the extension of certain deadlines under ERISA and the Code. The agencies expressed concern that without the extension, individuals might miss key deadlines during the COVID-19 outbreak, which could otherwise result in the loss or lapse of group health coverage or the denial of a valid claim for benefits under a pension or welfare plan. For group health plans subject to ERISA or the Code, the relief requires that the period from March 1, 2020 until 60 days after the end of the COVID-19 National Emergency or such other date announced by the agencies (known as the “Outbreak Period”) be disregarded in calculating certain deadlines affecting COBRA coverage (including those relating to qualifying event notification, elections and premium payments) and HIPAA special enrollment rights. For all welfare and retirement plans that are subject to ERISA or the Code, the notification provides that the Outbreak Period will be disregarded when calculating the deadlines by which participants and beneficiaries may make timely claims for benefits and appeal denied claims (and in the case of group health plans, request external review). In addition, the period for group health plans (and their sponsors and administrators) to provide a COBRA election notice will be calculated disregarding the Outbreak Period. Though the notification doesn’t change the effective date of the COBRA coverage, it gives plans and plan sponsors greater flexibility in sending the actual COBRA election notices. Significantly, the relief provided applies regardless of whether the applicable individual or plan has been affected by COVID-19. The notification provides a number of examples that illustrate the manner in which the extensions apply.
Second, Notice 2020-01, issued by the DOL, provides employers with an extension to comply with deadlines for the furnishing of notices, disclosures, and other documents required by provisions of Title I of ERISA that are within the DOL’s regulatory authority, except for those notices and disclosures addressed above. An employee benefit plan and the responsible plan fiduciary will not be in violation of ERISA for a failure to timely furnish a notice, disclosure, or document (including advance notice of a blackout period, even if not determined in writing) that must be furnished during the Outbreak Period if the plan and responsible fiduciary act in good faith and furnish the notice, disclosure, or document as soon as administratively practicable under the circumstances. The Notice describes “good faith acts” as including the use of electronic alternative means of communicating with plan participants and beneficiaries who the plan fiduciary reasonably believes have effective access to electronic means of communication, including email, text messages, and continuous access websites.
The Notice also includes a number of liberalized enforcement policies relating to plan loans, and remitting employee contributions and loan repayments to a plan. The Notice provides that DOL will not assert a violation of the requirements of Title I of ERISA with respect to plan loans (or a delay in the repayment thereof) solely because such loans or delay are made in conformity with the plan loan relief provisions of the CARES ACT. Similarly, DOL will not assert a violation of ERISA solely on account of a plan’s failure to adhere to its procedural requirements for loans and distributions, provided such failure is solely attributable to COVID-19 and certain other conditions are satisfied. Finally, the DOL will not take enforcement action against an employer or service provider solely on account of a temporary delay in forwarding participant contributions and loan repayments to a plan attributable to the COVID-19 outbreak.
The relief described in the Federal Register as well as Notice 2020-01 is generally subject to the 1-year duration limitation set forth in Section 518 of ERISA. Further, the Notice does not appear to extend the deadline for filing Form 5500s beyond the extension provided by IRS Notice 2020-23, which permits a Form 5500 that is otherwise due on or after April 1, 2020 and before July 15, 2020 to be filed on July 15, 2020.
The Notice states that the guiding principle for plans must be to act reasonably prudently and in the interest of the covered workers and their families, and admonishes plan fiduciaries to “make reasonable accommodations to prevent the loss of benefits or undue delay in benefit payments in such cases and to attempt to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established timeframes.”
Finally, in conjunction with the above, the DOL also issued FAQs intended to help participants, beneficiaries and plan sponsors understand their rights and responsibilities under ERISA, particularly in the context of COVID-19.