Federal Agencies Extend Employee Benefit Plan Deadlines in Response to COVID-19 Pandemic
On April 28, 2020, the Department of Labor (DOL), Department of the Treasury and Internal Revenue Service (IRS) jointly issued guidance providing relief from certain deadlines under the Employee Retirement Income Security Act of 1974, as amended (ERISA), and the Internal Revenue Code of 1986, as amended (the Code). The extensions provide additional time for individuals to enroll in group health plans during a special enrollment period provided under the Health Insurance Portability and Accountability Act of 1996, as amended (HIPAA), and to elect continuation of coverage under group health plans as provided by the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA). The extensions also provide additional time for plan participants to file claims for benefits and to appeal denials of benefit claims. In addition to the jointly issued guidance, the Employee Benefits Security Administration (EBSA) issued EBSA Disaster Relief Notice 2020-01 (Notice), which extends the time for plan officials to provide certain statements, notices and disclosures required to be furnished to plan participants under ERISA.
Exercising their statutory authority under ERISA and the Code to postpone certain deadlines with respect to employee benefit plans in the event of a national emergency, the DOL and IRS have extended the timeframes for providing notices and making certain elections applicable to group health plans, disability and other welfare plans, and retirement plans under ERISA and the Code. Retirement and welfare plans subject to ERISA or the Code must disregard the period from March 1, 2020, until sixty (60) days after the announced end of the national emergency due to the COVID-19 pandemic or such other date announced by the Agencies in a future notice (the “Outbreak Period”) in determining: (i) the 30- or 60-day period to request special enrollment in a group health plan under HIPPA, (ii) the date by which a COBRA election notice must be provided to a participant, (iii) the 60-day period for electing COBRA continuation coverage, (iv) the date for making COBRA premium payments, (v) the date by which employers or participants must notify a plan of a qualifying event or determination of disability under COBRA, (vi) the date for filing benefit claims, (vii) the date for filing an appeal of an adverse benefit determination, (viii) the date for requesting an external review of an adverse benefit determination, and (ix) the date for perfecting a request for external review of a benefit denial.
Under the Notice, EBSA has provided relief for plan fiduciaries and plan sponsors who fail to timely furnish a notice, disclosure or document required to be furnished between March 1, 2020, and the end of the Outbreak Period. Such relief is available where 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 provides that a plan fiduciary who furnishes notices, disclosures or documents to plan participants and beneficiaries through alternative electronic means, including emails, texts and continuous access websites, will be considered to have acted in good faith where the fiduciary reasonably believes that plan participants and beneficiaries have effective access to such communications. The Notice also provides a limited extension of time for Form M-1 filings for multiple employer welfare arrangements (MEWAs) and certain entities claiming an exception from MEWA status, comparable to the extension provided by the Department of the Treasury and the IRS for Form 5500 filings.
The Notice also provides relief for a plan’s failure to follow procedural requirements for loans or distributions from qualified retirement plans where (i) the failure is solely attributable to the COVID-19 outbreak, (ii) the plan administrator has made a good faith diligent effort to comply with the requirements and (iii) the plan makes a reasonable attempt to correct procedural deficiencies as soon as administratively practicable. This relief is limited to procedural requirements that are within the regulatory and interpretive authority of the DOL, and therefore would not cover any spousal consent or other statutory or regulatory requirements that are under the jurisdiction of the Department of the Treasury.
Under the Notice, relief is also provided with respect to the time period during which an employer must forward to a plan contributions or loan repayments that the employer receives from plan participants or beneficiaries or withholds from a participant’s wages. Such amounts are generally required to be forwarded to the plan as soon as they can be reasonably segregated from the employer’s general assets, but no later than the 15th day of the month following the month in which paid or withheld. The Notice provides that the DOL will not, solely on the basis of a failure attributable to the COVID-19 outbreak, take enforcement action with respect to a temporary delay in forwarding the payments or contributions during the Outbreak Period as long as the employer and any service provider acts reasonably, prudently and in the interest of employees to comply as soon as administratively practicable under the circumstances.
Relief is also provided with respect to the requirement that the plan administrator of an individual account plan provide 30 days’ advance notice to participants and beneficiaries whose rights under an individual account plan (such as the right to direct investments, obtain a loan or obtain a distribution) will be temporarily suspended, limited or restricted during a blackout period of more than three business days. DOL regulations provide an exception to the advance notice requirement where the plan administrator’s inability to provide the notice is determined by a fiduciary in writing to be due to events beyond the reasonable control of the plan administrator. The Notice states that the DOL will not require that fiduciaries make a written determination with respect to blackout notices that would otherwise need to be furnished during the Outbreak Period because pandemics are, by definition, beyond a plan administrator’s control.
If you have any questions on the foregoing, please feel free to reach out to us or your regular Stroock contact. Stroock’s employee benefits and executive compensation team are tracking the response of the DOL, the Department of the Treasury and the IRS to the COVID-19 pandemic closely and are available to address your employee benefit and compensation concerns.
For More Information
 Final Rule – Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak, 85 Fed. Reg. 26,351 (May 4, 2020).
 EBSA also issued on April 28, 2020, a set of Frequently Asked Questions (FAQs) explaining the rights and responsibilities under ERISA of plan participants and beneficiaries, plan sponsors and employers impacted by COVID-19. See FAQs on the Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security Act Implementation. The FAQs provide guidance with respect to a variety of issues that have arisen as a result of the COVID-19 outbreak, including eligibility issues, filing claims, availability of health coverage, application for retirement benefits and issues with contacting plan administrators.
 Section 518 of ERISA and Section 7508A(b) generally provide that in the case of an employee benefit plan or any plan sponsor, plan administrator, plan participant or beneficiary or other person affected by a presidentially declared disaster, the Secretaries of Labor and the Treasury may prescribe a period of up to one year that may be disregarded for purposes of determining the date by which any action is required or permitted to be completed.
This Stroock publication offers general information and should not be taken or used as legal advice for specific situations, which depend on the evaluation of precise factual circumstances. Please note that Stroock does not undertake to update its publications after their publication date to reflect subsequent developments. This Stroock publication may contain attorney advertising. Prior results do not guarantee a similar outcome.