Health Care Benefits and COVID Deadline Extensions: An Update

Health Care Benefits and COVID

The EBSA Disaster Relief Notice 2021-01, recently issued by the U.S. Department of Labor (DOL), clarifies the duration of certain COVID-19-related deadline extensions. As these deadline extensions apply to health care benefits plans, they should be of interest to employers.  

Deadline extensions will continue

The COVID-19 outbreak period is defined as beginning March 1, 2020, and ending 60 days after the announced end of the COVID-19 national emergency. However, according to guidance issued last year by the DOL and IRS, the COVID-19 outbreak period should be disregarded when calculating various deadlines under special enrollment provisions from COBRA, ERISA, and HIPAA.

The original emergency declaration, which would have expired on March 1, 2021, was recently extended. However, questions have arisen as to whether the outbreak period was required to end one year after it began, on February 28, 2021. This is because agencies defined the outbreak period solely by reference to the COVID-19 national emergency, but were relying on statutes that allowed them to specify disregarded periods for a maximum of one year. 

The EBSA Disaster Relief Notice 2021-01 gives an answer to these questions—by providing that these extensions have continued past February 28 and will be measured on a case-by-case basis. According to the Relief Notice, extensions to applicable deadlines for individuals and plans that fall within the outbreak (or disregarded) period will last until the earlier of:

  • The end of the outbreak period
  • One year from the date the individual or plan was first eligible for outbreak period relief

The timeframes that were previously disregarded will resume once the disregarded period has ended. This means that while the outbreak period will continue until 60 days after the end of the COVID-19 national emergency, the maximum disregarded period for calculating relevant deadlines cannot exceed one year for any individual or plan.

Clear communication is advised

The DOL has advised that plan sponsors consider sending notices to participants clarifying the end of the relief period, which may include amending or reissuing previous disclosures that are no longer accurate. In addition, the Relief Notice advises sponsors to ensure that participants who are losing coverage are aware of other coverage options—including, for example, the COVID-19 special enrollment period in Health Insurance Marketplaces, also known as “Exchanges”.

As the Relief Notice 2021-01 acknowledges, the COVID-19 pandemic may disrupt normal plan operations. However, the DOL offers reassurance that enforcement will emphasize compliance assistance and other relief for fiduciaries acting in good faith and with reasonable diligence—and that the IRS and U.S. Department of Health and Human Services concur with the guidance and its application to laws under DOL jurisdiction.

Additional challenges

Although the clarification offered by the Disaster Relief Notice will likely be helpful to plan sponsors and administrators, its timing and the way it interprets the one-year limitation could be disappointing—after all, determinations of the disregarded period that depend on individual circumstances may give rise to significant administrative challenges. In addition, plan sponsors and administrators will need to quickly develop a strategy for communicating these complicated new rules to participants. 

For further information and updates, contact us today.