Last year, the Department of Labor (working in concert with other agencies) issued two notices extending a variety of benefit plan deadlines as a result of the COVID-19 national emergency, as discussed in detail in our May 2020 blog. The relief generally provided that, in determining deadlines, 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 (also known as the “Outbreak Period”) would be disregarded. However—and notably—the Outbreak Period was generally subject to the one-year duration limitation set forth in Section 518 of ERISA.
If the “one-year duration limitation” had in all cases begun on March 1, 2020, that one year would have already come and gone, even while the COVID-19 national emergency continues. But the DOL has now, by way of EBSA Disaster Relief Notice 2021-01, issued further guidance that provides for an individualized application of the one-year duration limitation.
Notice 2021-01 clarifies the agencies’ position that the Section 518 one-year duration limitation does not end for all plans and individuals on February 28, 2021, but instead is applied on an individual basis, by reference to the specific applicable deadline that occurred during the Outbreak Period. For example, an individual who was initially required to make a COBRA election by March 1, 2020 will now be required to make such an election by March 1, 2021. An individual who would normally have been required to make a COBRA election by November 1, 2020 will now be required to make such an election by the earlier of November 1, 2021 or the end of the Outbreak Period (i.e., 60 days after the end of the COVID-19 National Emergency or such other date announced by the agencies). This somewhat unexpected interpretation will place an additional burden on plan administrators and plan fiduciaries, who will need to ensure that they and their third party service providers are tracking individual deadlines. Moreover, Notice 2021-01 was not released until late on February 26, 2021 – two days before the one-year duration limitation was set to expire.
While the guidance does not discuss the possibility, it appears that in the case of a single benefit transaction with multiple deadlines (e.g. a COBRA election notice and a COBRA election) the new interpretation of the one-year duration limit could result in multi-year extensions (at least until the Outbreak Period is over).
As would be expected, the guidance indicates that if plan disclosures (such as COBRA election notices and claims procedure notices) issued prior to or during the pandemic failed to provide accurate information regarding the deadlines applicable to participants and beneficiaries, they should be reissued or amended as needed to provide accurate information. The Notice also emphasizes that as part of their duty to act reasonably, prudently, and in the interest of plan participants and their families, plan fiduciaries should make reasonable accommodations to minimize the possibility of individuals’ losing benefits due to failure to comply with deadlines. By way of example, the guidance indicates that if a plan administrator or fiduciary knows, or reasonably should know, that the end of the relief period is approaching and will expose a participant or beneficiary to a risk of losing protections, benefits or rights under a plan, the administrator or fiduciary should consider sending a notice regarding the end of the relief period. Further, according to the guidance, plan administrators of group health plans should consider ways to ensure that participants and beneficiaries who are losing coverage are made aware of other coverage options that may be available to them, including the opportunity to obtain coverage through the Health Insurance Marketplace in their state. While the guidance does not expressly mandate these actions in all cases, it will be interesting to see if courts, reviewing a claim for COBRA benefits or considering whether a participant or beneficiary has failed to exhaust administrative remedies, take into account a plan administrator’s failure to pursue them.
The DOL does provide some relief for plan fiduciaries. Noting that there “may be instances when full and timely compliance with ERISA’s disclosure and claims processing requirements by plans and service providers may not be possible,” the DOL states it will approach enforcement with an emphasis on compliance assistance, including grace periods and other forms of relief.