The US Department of Labor’s Employee Benefits Security Administration (DOL) and the Internal Revenue Service (IRS) issued guidance last week providing deadline and other relief affecting welfare plans and their sponsors and administrators under the Employee Retirement Income Security Act of 1974, as amended (ERISA) and the Internal Revenue Code of 1986, as amended (Code).
The guidance included EBSA Notice 2020-01 that extends the time for plan officials to furnish benefits statements and other disclosures required under ERISA and a joint final rule that extends certain time frames affecting a participant’s right to healthcare coverage, portability and continuation of group health plan coverage under COBRA after employment ends. These two pieces of guidance are described below. In addition, the DOL issued a set of Frequently Asked Questions (FAQs) directed to help participants and beneficiaries impacted by the coronavirus (COVID-19) understand their rights under ERISA. While these FAQs are directed to participants, they include informative guidance for plan sponsors and employers as well.
The relief provided under EBSA Notice 2020-01 applies retroactively from March 1, 2020, the beginning of the COVID-19 national emergency declared by President Donald Trump, until 60 days after the announcement of the end of the national emergency or such other date as the DOL determines. Below is a summary of the significant topics addressed by EBSA Notice 2020-01 and the accompanying FAQs as they relate to welfare plans:
Common notices and disclosures required by Title I of ERISA and that come within the scope of the relief provided by EBSA Notice 2020-01 include:
An employee benefit plan and the responsible fiduciary will not be in violation of ERISA for a failure to timely furnish a notice, disclosure, or document that must be furnished between March 1, 2020, and 60 days after the announced end of the COVID-19 national emergency, if the plan and responsible fiduciary “act in good faith and furnish the notice, disclosure or document as soon as administratively practicable under the circumstances.” Good faith acts include the use of electronic communications with plan participants and beneficiaries who the plan fiduciary reasonably believes have effective access to electronic means of communication, including “email, text messages, and continuous access websites.” This is a significant expansion on the ability of plan administrators to use electronic media to issue participant communications. It remains to be seen if this position demonstrates a willingness to loosen the restrictions currently applicable to welfare plans.
The Final Rule addresses two primary areas: (1) timeframes impacting participants and beneficiaries; and (2) timeframes impacting plan sponsors and plan administrators.
The Final Rule does not address what action, if any, a plan sponsor must take to notify participants and beneficiaries of the extension of deadlines noted above. Furthermore, the extension of the deadlines creates potentially significant administrative and financial burdens on the plan sponsor particularly given the uncertainly of when the period national emergency will expire.
The broad relief provided by these notices, however, is a welcome development for plan fiduciaries that may be struggling to satisfy their disclosure or notice obligations during the COVID-19 crisis. Personnel must keep in mind that the relief does not extend the compliance deadlines indefinitely. Rather, the DOL generally expects plan fiduciaries to make good faith efforts to comply with their legal requirements as soon as administratively practicable under the circumstances. As these circumstances are likely to be second-guessed in the years following the end of the current crisis, plan administrators might consider documenting the reasons for any delays, the good faith efforts that are undertaken to comply, and the circumstances giving rise to the compliance occurring as soon as administratively practicable.
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 The additional time to provide notice of special enrollment or to elect COBRA continuation coverage will increase the likelihood of adverse selection as employees can delay taking action to receive coverage until they assess the need for coverage.
 The Final Rule appear to support the idea that benefits do not have to be paid during the time premium payments are due, but if payment is made prior to the extended deadline, benefits must be provided retroactively.
 Many health care flexible spending accounts have a claim filing deadline of March 31. As a result of the Final Rule, plan administrators should reach out to participants who had residual account balances and tell them the filing deadline has been extended and that they still have time to file claims for the 2019 plan year. Note that the extension does not apply to dependent care FSAs that are not subject to ERISA, but there is no reason an employer could not apply the extension to dependent care FSAs as well.