EBSA Disaster Relief Notice 2021-01
Guidance on Continuation of Relief for Employee Benefit Plans and Plan Participants and Beneficiaries Due to the COVID-19 Outbreak
In May 2020, the Departments of Labor and Treasury issued guidance placing a moratorium on the ability of employee benefit plan administrators to enforce several deadlines applicable to benefit plans during the COVID “Outbreak Period.” The “Outbreak Period” was defined as the period beginning on March 1, 2020 and ending sixty days after the end of the COVID National Emergency.
While the National Emergency period continues, until the President declares otherwise, individuals and plans with timeframes that are subject to the relief will be afforded a pause (or delay to comply) in regard to COBRA elections and payment period deadlines until the earlier of:
(a) One year from the date the individuals and plans were first eligible for relief, or
(b) 60 days after the announced end of the National Emergency (the end of the Outbreak Period).
The following examples illustrate the duration of the relief:
If a qualified beneficiary would have been required to make a COBRA election by March 1, 2020, the Joint Notice delays that requirement until February 28, 2021, which is the earlier of one year from March 1, 2020 or the end of the Outbreak Period (which remains ongoing).
Similarly, if a qualified beneficiary would have been required to make a COBRA election by March 1, 2021, the Joint Notice delays that election requirement until the earlier of one year from that date (i.e., March 1, 2022) or the end of the Outbreak Period.
Likewise, if a plan would have been required to furnish a notice or disclosure by March 1, 2020, the relief under the Notices would end with respect to that notice or disclosure on February 28, 2021. The responsible plan fiduciary would be required to ensure that the notice or disclosure was furnished on or before March 1, 2021.
The “Outbreak Period” is still ongoing, which means individuals who experience a COBRA qualifying event any time before the Outbreak Period ends will be provided the COBRA deadline extension relief, but have no more than one year from the date an individual was first eligible for relief, or 60 days after the announced end of the National Emergency (the end of the Outbreak Period). For example, if a COBRA election period began May 1, 2020, then the relief ends on April 30, 2021. (Assuming the National Emergency does not end earlier than April 30, 2021.) It's at that point that the COBRA 60-day election period officially begins.Therefore, the individual would have a due date of June 29, 2021 to elect.
The determination of when the Outbreak Period ends will be calculated based on each individual's event. For example, if a qualified beneficiary’s clock started on February 1, 2020 (prior to the Outbreak Period), the clock for COBRA deadlines starts on February 1, 2020 under the standard rules. However, the declaration of the Outbreak Period paused the deadlines on March 1, 2020. As a result, the 28 days in February counts against the election period and payment grace periods when one year expires or at the time the Outbreak ends. Essentially, the clock picks up where it left off.
There is a debate on how to identify the COBRA premium due dates and whether the employer requires payment of all outstanding premiums in one big balloon payment, within 30 days of the end of the one-year period. For example, if the COBRA member stopped paying premiums in March 2020, the guidance is clear that March 2020 premium can be required to be paid by March 31, 2021.
But, what about April 2020, May 2020, June 2020, etc. payments? Does the individual have to pay the entire outstanding premium by March 31, 2021? While guidance is unclear, the regulators state that plan administrators must “… act reasonably, prudently, and in the interest of the workers and their families … 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.”
Per the guidance noted above, the conservative approach is to provide each monthly period up to the one-year mark (i.e., April 2020 is due April 30, 2021, May 2020 is due May 30, 2021, etc.) Although, some COBRA administrators are taking the position that outstanding premiums are due in one lump sum; in this example, due by March 31, 2021.
Additional fiduciary responsibilities include plan disclosures. Plan disclosures issued prior to or during the pandemic may need to be reissued or amended if such disclosures failed to provide accurate information regarding the time in which participants and beneficiaries were required to act, e.g., COBRA election notices and claims procedure notices. Furthermore, plans should consider ways to ensure that participants and beneficiaries who are losing coverage under their group health plans 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. Should the plan send a notice reminding a COBRA-qualified beneficiary that the 12-month deadline moratorium will be ending, and the election will be due? Should a completely new election notice be sent, especially if premiums have changed? These notice considerations should be taken seriously as a matter of fiduciary responsibility.