What to Know About the New Guidance on Employee Benefits

May 13, 2020

Employers should be aware of recent changes to deadlines and relief for employee benefit plans, participants and beneficiaries due to the COVID-19 pandemic. The Employee Benefits Security Administration of the Department of Labor and Internal Revenue Service (collectively, the Agencies) recently issued guidance to (a) further explain relief included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and (b) extend certain deadlines applicable to benefit plans. The guidance is included in three documents:

  • Final Regulations (Final Rule) issued jointly by the Agencies
  • EBSA Disaster Relief Notice 2020-01 (the Notice)
  • COVID-19 FAQs for Participants and Beneficiaries

Below is a summary of the guidance.

Extension of Certain Timeframes under the Final Rule

Under Section 518 of ERISA, the Secretary of Labor has the authority to delay deadlines due to a Presidential-declared disaster. In March, President Donald Trump issued the Proclamation on Declaring a National Emergency concerning the Novel Coronavirus Disease Outbreak and by separate letter determined that a national emergency exists nationwide beginning March 1 (the COVID-19 Emergency). As a result of the COVID-19 Emergency, the Agencies have indefinitely extended the following deadlines:

Deadlines Regarding Participants and Beneficiaries

  • The 30- or 60-day period to request special enrollment under HIPAA
  • The 60-day election period for COBRA continuation coverage
  • The deadline for making COBRA premium payments
  • The deadline for individuals to notify the plan of a COBRA-qualifying event or disability determination
  • The deadline for individuals to file a claim for benefits under a plan’s claims procedures
  • The deadline for individuals to appeal an adverse benefit determination
  • The deadline for individuals to request an external review after receipt of an adverse benefit determination
  • The deadline for a claimant to perfect a request for external review upon finding that the request was not complete

Deadlines Regarding Group Health Plans

  • The deadline to provide a COBRA Election Notice

No deadline will be imposed during the period from March 1 through 60 days after the COVID-19 Emergency is formally ended. Plan sponsors and administrators must be prepared to adjust their administration to reflect that this period will be disregarded entirely in calculating deadlines. The Agencies are monitoring the effects of the COVID-19 Emergency and may provide additional relief as warranted.

Relief for Employee Benefit Plans

The Notice provides the following additional relief to employee benefit plans, which includes:

  • The deadlines for all disclosures and notifications required under Title I of ERISA (except those addressed in the Final Rule) are extended during the Outbreak Period. A plan will not violate ERISA if the plan and responsible fiduciary act in good faith and furnish [the information] “as soon as administratively practicable under the circumstances.” According to the Notice, “good faith” delivery includes the use of electronic alternative means of communicating with participants and beneficiaries, including email, text messages, and continuous access websites. Title I contains many of the disclosure obligations of employee benefit plans and includes Summary Annual Reports, Summary Plan Descriptions, and participant benefit statements, among others.
  • Certain verification procedures applicable to plan loans and distributions are relaxed, provided:
    • The failure to compile information is solely attributable to the COVID-19 outbreak
    • The plan administrator makes a good-faith, diligent effort to comply with the requirements
    • The plan administrator makes a reasonable attempt to correct any procedural deficiencies, such as gathering the missing documentation, as soon as administratively practicable
  • The Department will not take enforcement action against employers and service providers who fail to remit participant contributions and loan repayments timely “solely on the basis of a failure attributable to the COVID-19 outbreak.”
  • The deadline to provide blackout notices is extended under the relief provided under ERISA Section 518, provided that a plan administrator makes a good faith effort to distribute the Notice timely and makes a written determination that the failure to provide the Notice timely was beyond the control of the plan administrator.

Additionally, the Notice includes general fiduciary guidance. According to the Notice, “[p]lan fiduciaries should make reasonable accommodations to prevent the loss of benefits or undue delay in benefits payments” and “minimize the possibility of individuals losing benefits because of a failure to comply with pre-established timeframes.”

Guidance for Participants and Beneficiaries

The DOL issued several frequently asked questions regarding health and retirement benefits. These FAQs address several issues, such as special enrollment rights, COBRA rights, health coverage options, retirement plan distributions and defined contribution plan quarterly benefit statements. They are intended to assist participants and beneficiaries who are having difficulty with their benefits. Plan sponsors and administrators should review these FAQs on the DOL website to ensure that they are providing participants and beneficiaries with adequate information.

Please contact Karleen Green, Michael Williams and Seale Pylate or Phelps’ Employee Benefits team if you have any questions or need compliance advice and guidance. For more information related to COVID-19, please also see Phelps’ COVID-19: Client Resource Portal.