But Federal Agencies Drop a Bomb on Plan Administrators
During 2020, the federal government released a series of guidance directed at assisting individuals during the pandemic. On January 27, 2020, the Department of Health & Human Services (HHS) declared a COVID-19 Public Health Emergency Period. On March 13, 2020, President Trump declared a National Emergency due to the COVID-19 pandemic retroactive to March 1, 2020. In connection, the U.S. Departments of Labor (DOL) and Treasury (collectively referred to as the “Agencies”) issued guidance designating an Outbreak Period providing certain plan administrative relief.
While the Public Health Emergency Period is set to continue for the foreseeable future, the Outbreak Period is ending. This Alert focuses on how the Outbreak Period relief will wind down for plans and plan administrators and includes the following sections:
- The Difference between the Public Health Emergency Period and Outbreak Period
- Bombs Away – EBSA Disaster Relief Notice 2021-01
- Communication Issues
- Sample General Notice for End of Outbreak Period Relief
The Difference between the Public Health Emergency Period and Outbreak Period
The two terms are not interchangeable and should not be confused with one another.
COVID-19 Public Health Emergency Period (“PHE”)
HHS has the authority to declare a public health emergency for a period of up to 90 days and may extend that declaration for successive 90-day periods. The declaration gives HHS the authority to take various actions related to an identifiable health crisis. The PHE was initially effective January 27, 2020, and HHS has extended it several times. The PHE is currently set to expire on April 21, 2021, but HHS may extend it again for at least one additional 90-day period. Among other things, the PHE affects the COVID-19 diagnostic testing and preventive services mandates applicable to medical coverage.
COVID-19 Outbreak Period (“Outbreak Period”)
On April 28, 2020, the Agencies issued guidance granting certain plan administration relief during a defined Outbreak Period related to the National Emergency under the authority of ERISA §518 and Internal Revenue Code §7508A. This relief included the suspension of deadlines for certain plan disclosures, COBRA elections and payment, special enrollment rights, and the benefit claims and appeals process. HHS eventually adopted this relief for non-federal governmental plans on a voluntary basis. Please see our earlier Alert for more information about the specific relief granted during the Outbreak Period.
The Outbreak Period officially began on March 1, 2020, the effective date of the National Emergency, and was set to end 60 days after the end of the National Emergency.
Last April, it was hard to imagine the U.S. might still be in the middle of the pandemic in 2021 with the Outbreak Period still in effect. An interesting issue recently emerged, because ERISA §518 and Internal Revenue Code §7508A only permit up to one year of plan administration relief for the COVID-19 National Emergency.
To our knowledge, this is the first time plan relief has run into the one-year statutory limit, and it raised several questions: Does the Outbreak Period have a hard stop at February 28, 2021? Would the Agencies let it expire or attempt to extend the Outbreak Period despite not having the apparent statutory authority to do so? Would the government attempt some sort of other extension or similar relief?
We were so sure the Agencies would communicate their intentions, we held off publishing this Alert until their guidance appeared. Admittedly, we expected the guidance to appear earlier.
Biden Administration Extends National Emergency
The Biden Administration took steps to extendtheCOVID-19NationalEmergency on February 24, 2021, which allows the federal government to continue to use certain emergency powers to fight the pandemic. This extension does not directly affect the PHE. This extension does affect the Outbreak Period relief based on the Agencies’ guidance issued on February 26, 2021.
Bombs Away: EBSA Disaster Relief Notice 2021-01
In short, EBSA Disaster Relief Notice 2021-01 (the “Notice”) attempts to construe the Outbreak Period relief in the most favorable way possible for affected individuals in light of the one year statutory limitation for plan relief under ERISA §518 and Internal Revenue Code §7508A.
The Notice revises the relief as follows:
- The Outbreak Period began March 1, 2020 and remains in effect until 60 days after the National Emergency ends. This means the Outbreak Period continues and did not end on February 28, 2021.
- If all or a portion of the timeframe to act on an event subject to the relief occurs during the Outbreak Period, the remaining time for an individual to act is suspended (i.e. frozen) until the earlier of:
- One year from the date the Outbreak Period relief for that event began; or
- Sixty days after the National Emergency ends.
This means the Agencies are applying the one-year limitation for plan administrative relief on a case-by- case basis. This guidance also means the same individual could have multiple events with different relief timelines. This is the Agencies’ solution to the one-year statutory limitation for plan administrative relief, and it appears this does fit within the letter of the statutes. The Notice does not adjust timeframes if a due date falls on a weekend or holiday.
The relief also generally applies to plan disclosures, but there is no question this guidance puts a considerable burden on plans and plan administrators.
Non-federal governmental plans: Remember that HHS made Outbreak Period relief voluntary for non-federal governmental plans. We believe plans voluntarily complying with Outbreak Period relief retain the flexibility to end this relief prospectively on their own terms.
ABC Company laid off a number of employees on May 15, 2020. Medical coverage for the affected employees terminated on the last day of the month, and their COBRA qualifying event date was June 1, 2020. Assume ABC Company timely provides COBRA election notices and the maximum one-year relief period applies.
- The applicable relief period for this COBRA qualifying event is June 1, 2020 through May 31, 2021.
- On June 1, 2021, the 60-day COBRA election window begins. The COBRA qualifying beneficiaries have through July 30, 2021 to elect COBRA.
ABC Company laid Chris off on November 10, 2020, and his medical coverage terminated on the last day of the month. Chris elected COBRA coverage and paid premiums for the months of November and December but not January. The ABC Company medical plan allows a 30-day grace period to pay COBRA premiums measured from the due date. Assume the National Emergency ends on July 1, 2021.
- The applicable relief period for Chris’ January COBRA payment is January 1, 2021 through August 30, 2021, 60 days after the end of the National Emergency.
- On August 31, 2021, the 30-day COBRA premium payment grace period begins. Chris has through September 29, 2021 to make his January COBRA premium payment.
Note: A separate relief period applies to Chris’ missed February COBRA premium payment and any other missed premium payments during the Outbreak Period. A COBRA participant must catch up earlier missed periods in order to have coverage for a later period.
The ABC Company medical plan provides a 31-day special enrollment window for marriage and the birth or adoption of a child. Kristen is an eligible employee and married on February 20, 2020. Kristen gave birth to a son on October 9, 2020. Assume the maximum one-year relief period applies.
Marriage Special Enrollment
- Kristen used 9 days of her 31-day special enrollment period before the March 1, 2020 Outbreak Period relief took effect.3.
- Kristen’s applicable relief period is March 1, 2020 through February 28, 2021.
On March 1, 2021, Kristen’s special enrollment period begins again. Kristen has through March 21, 2021 to complete her special enrollment.
Birth Special Enrollment
- Kristen’s applicable relief period is October 10, 2020 through October 9, 2021.
- On October 10, 2021, Kristen’s special enrollment period begins again. Kristen has through November 9, 2021 to complete her special enrollment.
The Notice encourages plan administrators to notify affected individuals when suspended timeframes to complete events begin to run again, and we believe general plan administration principles require this. Plans are not required to notify individuals before the timeframes begin to run again, but plans should give affected individuals sufficient warning to exercise their rights before they expire.
EBSA Disaster Relief Notice 2021-01 states:
“This means that plan fiduciaries should make reasonable accommodations to prevent the loss of or undue delay in payment of benefits in such cases and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames.
For example, where the plan administrator or other responsible plan fiduciary knows, or should reasonably know, that the end of the relief period for an individual action is exposing a participant or beneficiary to a risk of losing protections, benefits, or rights under the plan, the administrator or other fiduciary should consider affirmatively sending a notice regarding the end of the relief period.”
There is no specific rule addressing what qualifies as sufficient warning, but we recommend plans consider providing notice as soon as it is administratively practical to do so and at least one week before the timeframe to complete an event expires.
As written, the Notice also appears to favor individualized notices. This is relatively straightforward for certain events such as COBRA election and payment, but it will not be feasible in all cases. For example, a plan administrator may not know of an individual’s special enrollment event or that a participant incurred but has not submitted an out-of-network claim.
We will provide a sample general notice describing the end of the Outbreak Period relief at the end of this Alert for employers to review and consider. The DOL relaxed their electronic delivery rules during the Outbreak Period. The DOL authorizes communication with employees and participants via emails, text messages, and/or websites as “good faith delivery of communication so long as the plan fiduciary “reasonable believes [plan participants and beneficiaries] have effective access to [such] electronic means of communication” and/or “continuous access” to websites.4 The plan can also follow normal paper mailing procedures.
Note: These communication issues apply to all affected individuals with events subject to Outbreak Period relief. This may include COBRA qualifying beneficiaries whose COBRA qualifying events occurred many months ago. While we agree it is unlikely that an individual will retroactively elect COBRA six or more months after-the-fact, we recommend employers consult with their legal counsel and weigh the risks before choosing to exclude any affected individuals from its notification efforts.
Sample General Notice for End of Outbreak Period Relief
Beginning March 1, 2020, the federal government suspended the deadlines for individuals to complete certain health plan actions, including:
- Benefit election changes due to marriage, birth and/or adoption, and the loss of other health coverage;
- The time to submit claims for benefits or appeal denied benefit claims; and
- COBRA enrollment and premium payment.
Events that occurred before March 1, 2020 also qualified for this relief if the timeframe to complete the action ended on or after March 1, 2020.
Pursuant to EBSA Disaster Relief Notice 2021-20, the timeframe to complete a suspended health plan action will begin to run again on the first to occur of the following:
- One year from the date the relief for the event began; or
- Sixty days after the federal government declares the COVID-19 National Emergency over.
If you have any questions about this relief or how your rights may be affected, please contact [insert contact information]. Additional information about this relief is available from the U.S. Department of Labor here:
 This included the IRS.
 Please see the HHS Public Health Emergency Declaration site for more information.
 February had 29 days in 2020.