In the case of a disaster declared by the President, such as the national emergency regarding Covid 19 declared by the President on March 19, 2020, the Department of Labor and the Internal Revenue Service (the “Agencies”) have the authority to suspend for up to one-year certain timeframes imposed by ERISA and the Internal Revenue Code (the “Code”). On May 4, 2020, the Agencies provided relief from certain timeframes relating to medical plans, including continuing coverage under COBRA, disability and other welfare plans and pension plans. The intent of these extensions is to minimize the possibility of participants losing benefits due to a failure to comply with existing notice periods during this national crisis. No hardship or COVID-19 impact is required for these extensions to apply.
The relief provided by the Agencies requires that plans subject to ERISA or the Code disregard or “toll” the period from March 1, 2020 until sixty (60) days after the announced end of the national emergency (the ”Outbreak Period”) for the purposes of certain timelines related to COBRA, notification of qualifying events under a medical plan, the filing of benefit claims, or appeals under welfare or pension plans.
The relief requires employers to change existing procedures to allow additional time due to the Outbreak Period. In particular:
- The 60-day period during which an employee who has lost coverage due to termination or reduction of hours can elect COBRA continuation coverage is extended by the Outbreak Period; and
- The 30-day period to pay the COBRA premium after the 1st day of each coverage period is extended by the Outbreak Period.
For example, assuming that the President ends the national emergency on May 31st (therefore the Outbreak Period would end on July 30, 2020), then an employee terminated on March 1, 2020 would be able to elect COBRA coverage until September 28, 2020; or a former employee who had been paying COBRA premiums and who stops making their payments in March 2020 would have until August 29, 2020 to pay all the back-due premiums and retain coverage.
- The notice period during which an employee who has experienced a “life event” can enroll into a medical plan is extended by the Outbreak Period; and
- The period during which a participant can file a claim under a plan is extended by the Outbreak Period.
For example, assuming that the President ends the national emergency on May 31st, then an employee who had a child born on March 31, 2020 would be able to enroll in the medical plan until August 29, 2020; or if the plan requires claims be submitted within 365 days of the service, then a procedure performed on March 1, 2020 would have to be submitted by July 30, 2021 to be paid by the plan.
All ERISA Plans:
- The notice period to file for a benefit is extended by the Outbreak Period; and
- The period during which a participant can file an appeal of a denial of benefits is extended by the Outbreak Period.
The notice provisions applicable to covered benefits are complex and your particular plan may have different notice provisions than required by statute. If you have a question regarding the application of these rules to your plans, please contact S. John Ryan at (212) 574-1679, Michael O’Brien at (212) 574-1505 or Bradley Fay at (212) 574-1429.
Seward & Kissel has established a COVID-19 Resource Center on our web site to access all relevant alerts that we distribute.