Benefit Plan Regulatory Relief in Response to COVID-19 – Guidance for Employers

Benefit Plan Regulatory Relief in Response to COVID-19 – Guidance for Employers

Benefit Plan Regulatory Relief


In response to the declaration of a national emergency relating to the COVID-19 outbreak, the Departments of Labor and Treasury issued three pieces of guidance on April 28, 2020.  This guidance consisting of final regulations, a Disaster Relief Notice 2020-01, and a set of FAQs provides for certain timing relief for plans and participant actions, as more fully described below. 

Generally, this guidance applies for the “outbreak period” from March 1, 2020 (the beginning of the national emergency declared by the President) until 60 days following the end of the national emergency period.  At this point, we do not know when the national emergency outbreak period will end.  Further, the governing agencies reserved the right to change the ending date of the outbreak period either by broad application or specific to a region. Following are highlights of this guidance.

Please refer to the CBIZ Benefits & Insurance Services’ Employer Compliance Handbook: COVID-19's Impact on Benefits and Employment for additional information on COVID-19-driven employement laws and regulations, state law actions, and benefit plan considerations,

Welfare Benefit Plans

The extensions for certain reporting and disclosure deadlines provided in this guidance apply to group health plans, disability and other welfare plans subject to ERISA and Internal Revenue Code requirements. While the Department of Health and Human Services is not explicitly joined in this guidance, it has indicated that it would support comparable standards being applied to state and local government health plans.

The following existing deadlines are tolled up to 60 days beyond the end of declared emergency, or any other date designated by the governing agencies, i.e., enforcement action will not be taken if an otherwise applicable deadline is not met.

HIPAA Special Enrollment

The HIPAA special enrollment period that becomes available upon the occurrence of certain events such as when an employee or dependent loses eligibility for group or other health insurance coverage, including coverage under Medicaid or the Children’s Health Insurance Program, or upon the acquisition of a dependent  by birth, marriage, adoption, or placement for adoption.  Plans are required to allow such individuals to enroll in the plan within 30 days of the occurrence of the event; or, 60 days for CHIPRA-related events.

Marketplace Special Enrollment

The FAQ related guidance reiterates the special enrollment opportunities available through the federal marketplace if employment-based coverage is lost.  In such event, the individual may qualify for a special enrollment period outside of the annual open enrollment period and select a plan within 60 days of loss of coverage.  Further, a special enrollment period is available if the loss of coverage is due to a family member’s death, or if an employer ceases to contribute to COBRA.   The FAQs also remind individuals that marketplace coverage may be more affordable than COBRA.

COBRA Timeframes

Several COBRA deadlines are extended until after the emergency period ends including:

  • The employer’s 30-day deadline to notify the plan administrator of a qualifying event such as termination or reduction in hours, death, Medicare entitlement, or the employer commencing a bankruptcy proceeding;
  • A qualified beneficiary’s 60-day deadline to notify the plan administrator of a divorce or legal separation, loss of dependent child status under the plan, or second qualifying event;
  • The 60-day deadline for individuals to notify the plan of a determination of disability;
  • The 14-day deadline for plan administrators to furnish COBRA election notices (also see Updated Model COBRA Notices below);
  • The 60-day deadline for participants to elect COBRA; and
  • A COBRA continuee’s 45-day deadline in which to make a first premium payment, as well as the 30-day deadline for subsequent premium payments. 

Updated Model COBRA Notices

In separate guidance released on May 1, 2020, EBSA issued a set of FAQs together with updated model COBRA notices, to provide additional explanation to Medicare-eligibles as to the interaction between Medicare and COBRA.  Both the initial general notice and election notice have been updated, and are available on EBSA’s website:

Plan sponsors are encouraged to either use these new notices, or incorporate the new language into their existing COBRA notices, as soon as practicable. 

Claims and Appeals Procedures

For plans subject to ERISA’s claims and appeals requirements, the deadlines for filing claims or an appeal of an adverse determination are extended.  Further, group health plans and disability plans must provide claimants at least 180 days following receipt of an adverse benefit determination to appeal.  For pension plans and other welfare benefit plans, the existing 60-day deadline is also extended.

External Review Process

For health plans subject to the ACA’s external review procedures, the deadline for seeking a state or federal external review process following exhaustion of an internal appeals procedures has been extended. Generally, external review process and timeframes may vary depending on whether a plan uses a state or federal external review process. 

For a federal external review request, the process must allow at least four months following receipt of the adverse benefit determination.  The deadline for filing information to perfect a request for external review has also been extended.

Notably, the timing delay is not extended to a plan’s responsibility to respond to claims, appeals and external review.

Retirement Plans

Verification requirements for plan loans and distributions

Enforcement relief is provided in instances where a plan fails to follow verification procedures to substantiate loans or distributions.  Such relief is only granted if the failure is solely attributable to the COVID-19 outbreak, the plan administrator makes a good-faith diligent effort under the circumstances to comply with those requirements and obtain any missing verification or documentation as soon as administratively practicable.

Participant Contributions and Loan Repayments

Under current law, participant contributions withheld from the individual’s wages by the employer that are used as plan contributions or to repay a plan loan constitutes plan assets.  Such amounts are required to be sent to the plan on the earliest date on which such amounts can reasonably be segregated from the employer’s general assets, but in no event later than the 15th business day of the month following the month in which the amounts were withheld by the employer.  Because there may be a delay by an employer or service provider to forward these monies as a result of a COVID situation, EBSA will not take any enforcement action against the employer or service provider as long as they comply as soon as administratively practicable. 

Blackout Advanced Notices

Plan administrators are required to provide an advanced 30-day notice to participants and beneficiaries when their rights under the plan will be temporarily suspended, limited, or restricted by a blackout period exceeding 3 consecutive business days; for example, a period of time when a participant would be unable to direct his/her investments or obtain a loan or distribution.   An exemption to this 30-day advanced notice is granted for the disaster relief period.

General Guidance Compliance

The DOL’s Disaster Relief Notice provides timing relief from certain ERISA Title I disclosures, such as providing the summary plan description, summary of material modification, qualified domestic relations orders, and the like, but only as long as the failure to timely provide the required documents is solely attributable to COVID-19 related issues, and as long as the plan administrator is working in good faith to otherwise comply with its reporting and disclosure obligations. 

Further, EBSA continues to sanction the use of electronic media for communicating required plan communications to participants through the use of email, text messages, and continuous access websites.

Form 5500 and Form M-1 Filing Relief

The Treasury and IRS provided extensions for certain tax filings in previously issued guidance (IRS Notice 2020-23), including the Form 5500.  The DOL’s Relief Notice affirms the filing extension relief for the Form 5500 filings that are otherwise due on or after April 1, 2020 and before July 15, 2020; these filings are now due July 15, 2020.  For plans not entitled to this delay, such as calendar year plans, the 5500 filing is due 7 months following the close of the plan year.  The Form 5558 can continued to be used to request a 2½ month extension.

The same extension relief afforded to Form 5500 filings also applies to Form M-1 filings required by multiple employer welfare arrangements (MEWAs).  Generally, the Form M-1 filing must be filed by March 1 of each year unless an extension is requested.  Thus, the due date for the 2019 Form M-1 filing is now July 15, 2020.

In Closing

This guidance leaves many unanswered questions, particularly as it relates to the delay in the COBRA election periods and, to a lesser degree, the delay in HIPAA special enrollment election periods.  Employers should closely work with their third party administrators, insurers, and stop loss carriers (if applicable) to determine how best to manage the potential eventuality of long periods of time lapsing without a COBRA election, a HIPAA special enrollment election, and perhaps even more challenging, a potential lengthy period of time without a COBRA premium payment.

Further, it is unclear to what extent employers and plans are obligated to communicate these changes to plan participants.  It is also uncertain how plans will manage claim payments during extended periods without premiums.  The regulations suggest that plans can treat claims similar to the way they are treated during a traditional COBRA election period.  Effectively, claims can be treated as pending during the period of unpaid premium. 

Hopefully, additional guidance will clarify these matters.  As more guidance is issued, we will communicate it to you.

Benefit Plan Regulatory Relief in Response to COVID-19 – Guidance for Employers~/Portals/0/PackFlashItemImages/WebReady/Benefit Plan Regulatory Relief in Response to COVID-19 – Guidance for Employers.jpg Plan Regulatory Relief in Response to COVID-19 – Guidance for Employers.jpgIn response to the declaration of a national emergency relating to the COVID-19 outbreak, the Departments of Labor and Treasury issued three pieces of guidance on April 28, 2020.  ...2020-05-04T19:43:48-05:00

In response to the declaration of a national emergency relating to the COVID-19 outbreak, the Departments of Labor and Treasury issued three pieces of guidance on April 28, 2020.  

Regulatory, Compliance, & LegislativeEmployee Benefits ComplianceCOVID-19