In our February 12th blog post, we raised the question of how to interpret the duration of the DOL/Treasury relief tolling certain benefit plan deadlines due to the COVID-19 pandemic. Without guidance from the agencies, it was unclear whether the relief was set to expire in a few days (on February 28, 2021) due to a one-year tolling limit in ERISA and the Internal Revenue Code, or whether it would continue for a longer period. Now we have our answer.
In EBSA Disaster Relief Notice 2021-01, the DOL explains that the one-year tolling period will be applied on an individual-by-individual basis, meaning that a deadline will be tolled until the earlier of (i) one year from the date the individual was first eligible for the relief, or (ii) the end of the Outbreak Period (i.e., 60 days after the announced end of the National Emergency, which is ongoing). This means that every plan participant and beneficiary who was subject to a deadline that expired March 1, 2020 or later will have until the one-year anniversary of that deadline to take the required action (i.e., elect or pay for COBRA coverage, exercise a special enrollment right, or file a claim or appeal), unless the Outbreak Period ends sooner. Somewhat unexpectedly, this includes individuals who have a deadline that expires after February 28, 2021.
What to do now? Plans need to consider the types of notices and/or announcements they should make to participants and beneficiaries, and whether those notices can be general in nature or need to be more individualized. In this regard, the DOL suggests that plans should consider affirmatively sending a notice regarding the end of the relief period if it knows or has reason to know that an individual’s relief period is ending. Plans also should review the notices they sent when this began, as the notices likely will need to be updated depending on how they were worded. Interestingly, the DOL Notice goes a step further by suggesting that plans consider ways to ensure that participants and beneficiaries who are losing group health coverage are aware of other options that may be available, such as Marketplace coverage, particularly in light of new special enrollment opportunities in certain states.
While the agencies’ position may be unwelcome news for some who expected the administrative burdens of tolling to end at the end of the one-year period on February 28,, 2021, it is not entirely unexpected. The DOL reiterates that, in light of the ongoing issues caused by the pandemic, plans should be administered in a reasonable manner taking into account the difficulties facing individuals due to the pandemic and the fact that they rely on the plans’ benefits for their well-being. With this guidance in mind, plan administrators should exercise caution and provide appropriate notice before denying an individual a benefit or right based on a failure to take action within the applicable timeframes.