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On April 28, 2020, the Department of Labor (“DOL”) and the Internal Revenue Service (“IRS”) issued COVID-19 related guidance applicable to employee benefit plans.  Specifically, the DOL issued Notice 2020-01, and the DOL and the IRS jointly issued final regulations (“Final Rule”) which temporarily extend deadlines applicable to plans and to participants, effective March 1, 2020 and continuing until 60 days after the end of the National Emergency (“Outbreak Period”). Additionally, the Notice provides additional guidance to defined contribution plans with respect to distributions and implementation of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Notwithstanding the relief provided to plan fiduciaries in the guidance, the Notice reiterates that plan fiduciaries have an ongoing fiduciary duty to act reasonably, prudently, and in the interest of participants. The DOL notes that plans should make reasonable accommodations to prevent the loss of benefits or undue delay in benefits payments, and particularly reduce the risk of participants losing benefits because of the plan’s failure to comply with pre-established timeframes.

Extended Deadlines Applicable to Participants and Beneficiaries/Dependents

Pension and Health Plans:    

  • Claims and Appeals: The Final Rule extends the deadline to file a claim or appeal in connection with an adverse benefit determination during the Outbreak Period. This applies to claims and appeals due on or after March 1, 2020, as well as “tolling” the timelines for claims currently pending during the Outbreak period. 

Health Plans Only:

  • HIPAA Special Enrollment: Under HIPAA, an individual has 30 days (60 days in some cases) to request enrollment in a group health plan following the occurrence of a HIPAA special enrollment event (e.g., birth of a child, marriage, loss of other coverage). The Final Rule requires plans to disregard the Outbreak Period when determining the deadline by which an individual must request a HIPAA special enrollment. 
  • Notice to the Plan of a COBRA Qualifying Event or Disability: The Final Rule requires plans to disregard the Outbreak Period when determining the 60-day deadline for individuals to notify the plan of a COBRA qualifying event — divorce, legal separation, a child’s loss of dependent status under the plan, or a disability determination by the Social Security Administration). There is no change in the deadline applicable to employers to notify the plan of a qualifying event.
  • COBRA Election Period: The Final Rule requires plans to disregard the Outbreak Period when determining the 60-day deadline by which an individual must elect COBRA continuation coverage due to a qualifying event.
  • COBRA Premium Payments: COBRA requires an individual who elects COBRA continuation coverage to make his or her initial payment within 45 days after the election, and plans are required to provide a grace period of at least 30 days for subsequent premium payments. The Final Rule requires plans to disregard the Outbreak Period when determining the deadline to submit COBRA premium payments.
  • External Review: For non-grandfathered group health plans, the Final Rule requires plans to disregard the Outbreak Period when determining the deadline for participants to file a request for external review after receiving an adverse benefit determination, or to submit information to perfect a request for external review during the Outbreak Period.

Extended Deadlines Applicable to Employee Benefit Plans

Pension and Health Plans:

  • Disclosures and Documents Required by Title I of ERISA: The Notice extends the deadline for Plans to timely provide participants and dependents with any notices, disclosures, or documents required under Title I of ERISA (e.g., Summary Plan Description, Summary Annual Report, etc.) that are due during the Outbreak Period. However, plans must make a good faith effort to provide these required documents as soon as administratively possible. Plans may use electronic methods such as email, text message, or a website posting to provide these required documents to plan participants. 
  • Extended Deadline for Employers to Submit Participant Contributions and Loan Repayments: Generally, participant contributions and loan repayments are considered to be plan assets and must be remitted to the plan as soon as such amounts can reasonably be segregated, but no later than the 15th day of the month after the month in which the amounts were paid or withheld (or for group health plans, participant contributions must be submitted no later than 90 days from the date on which the participant contribution is received by the employer or the date on which such amounts would otherwise have been payable to the participant in cash). The Notice provides that the DOL will not take enforcement action against employers and service providers if they fail to timely remit participant contributions and loan repayments during the Outbreak Period. 
  • Form 5500 Filing and Form M-1 Filing: The Notice confirms prior IRS guidance that extends the deadline to file a Form 5500 to July 15, 2020 for filings due on or after April 1, 2020 and before July 15, 2020. There is currently no relief for calendar year plans with a Form 5500 filing due date of July 31, 2020 (without extension). Form M-1 Filings required for multiple employer welfare arrangements are provided relief for the same period as the Form 5500 filing relief. 

Health Plans Only:

  • COBRA Election Notices: Normally, group health plans must notify qualified beneficiaries of their right to elect COBRA continuation coverage within 14 days of receiving notice of a qualifying event. The Final Rule provides that plans do not have to send a COBRA election notice during the Outbreak Period.

Defined Contribution Pension Plans Only:

  • No Advance Notice of Blackout Period Required: The Notice suspends the requirement to provide advance notice of a blackout period or to provide notice as soon as reasonably possible after the commencement of a blackout period during the Outbreak Period. 

Relief from DOL Enforcement for Plan Loans and Distributions

The Notice additionally makes the following clarifications with respect to plan loans and distributions from 401(k) and profit-sharing plans:

  • Verification of Eligibility for Plan Loans and Distribution: All plan loans and distributions issued in the Outbreak Period, regardless of whether they are made pursuant to the CARES Act, will not be considered as operational failures even if they are issued to participants without satisfaction of all verification requirements under the plan if: (1) the failure to satisfy such requirements is related to COVID-19; (2) the plan administrator made a good faith effort to comply with plan procedures; and (3) the plan administrator makes a reasonable attempt to correct any failures as soon as practicable
  • Implementation of the CARES Act: Plans may immediately implement any optional CARES Act provisions regarding plan loans and distributions without violating the plan document as long as the plan amendment is adopted by the last day of the first plan year beginning on or after January 1, 2022 and complies with the CARES Act. In addition, plan loans and the delay of loan repayments pursuant to the CARES Act will not be treated as prohibited transactions under ERISA.

Please contact Slevin & Hart for more information on how the Notice and Final Rule may affect your plan.

This publication is intended to provide general information only, and is not intended to provide legal advice.  It may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm. The distribution of our publications is not intended to create, and receipt of them does not constitute, an attorney-client relationship.

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