DOL Guidance Clarifies Duration of Outbreak Period Extensions: Extensions Apply on an Individual Basis

The Department of Labor and IRS recently issued Disaster Relief Notice 2021-01 which provides needed clarification on the duration of the Outbreak Period deadline extensions.  The agencies took the participant-friendly (but complex) position that the COVID-19 deadline extensions for COBRA deadlines, claims and appeals deadlines for Health FSA and HRA plans, and deadlines for HIPAA special enrollment periods continue beyond February 28, 2021 (one year from the declaration of the national emergency) and that the extensions apply on an individual-by-individual basis.

ProBenefits is working to implement necessary system updates to comply with this guidance as well as updating SPD language and COBRA communications.  Additional information with further specifics will be forthcoming.  In the meantime, below is an overview of the Notice.

Background

At the beginning of the COVID-19 pandemic last year, the Department of Labor and IRS issued guidance providing relief from certain deadlines during the COVID-19 national emergency.  Specifically, the guidance provided that the COVID-19 “Outbreak Period” (defined as the period beginning March 1, 2020 and ending 60 days after the announced end of the COVID-19 national emergency) is disregarded when calculating COBRA deadlines, claims and appeals deadlines for Health FSA and HRA plans, and deadlines for HIPAA special enrollment periods.  The national emergency was set to expire March 1, 2021 but has been extended.  While the Outbreak Period was defined by reference to the national emergency, the agencies’ ability to toll deadlines is limited by statute to period of one year.  This prompted questions regarding whether the Outbreak Period deadline extensions were set to expire at midnight on February 28, 2021.

Disaster Relief Notice 2021-01

Just two days before the relief was set to expire, the agencies provided answers to these questions in the form of Disaster Relief Notice 2021-01.  This guidance states that the deadline extensions continue beyond February 28, 2021 and apply on an individual-by-individual basis.  Deadlines for individuals that fall within the Outbreak Period are disregarded (delayed/suspended) until the earlier of (1) one year from the date the plan or individual was first eligible for relief or (2) the end of the Outbreak Period.  The deadlines that are impacted by Notice 2021-01 include:

• COBRA deadlines for election, payment of initial and subsequent premiums, individual notification of qualifying event, and disability notifications. While the deadline to furnish COBRA election notices is also extended, ProBenefits will continue to send required notices based on standard deadlines and procedures.  Additionally, ProBenefits will continue to send a termination of coverage notice if payments are not made within the standard deadlines – coverage will be retroactively reinstated if payments are subsequently made within the extended deadlines provided.

  Example:  A qualified beneficiary required to elect COBRA by March 1, 2021 has his/her election deadline delayed until the earlier of one year (February 28, 2022) or the end of the Outbreak Period.

• Claims runout and appeals deadlines for Health FSA and HRA plans.

  Example:  A calendar year Health FSA plan ending December 31, 2020, would normally have a 90-day runout period at the end of the plan year.  The March 31, 2021 runout deadline is delayed until the earlier of one year or the end of the Outbreak Period.  The runout period resumes after the duration of the deadline extension.

• HIPAA special enrollment right deadlines.

  Example:  Alice has a baby on April 1, 2021.  The HIPAA special enrollment right deadline (30 days from the baby’s date of birth) is delayed until the earlier of one year (March 31, 2022) or the end of the Outbreak Period.  While not addressed in the Notice, we presume this coverage would be retroactive.

In no event can the deadlines be delayed/suspended for any individual for more than one year.  If the Outbreak Period ends prior to the one-year period, the deadline suspension will be shorter than one year.

Reasonable Accommodation Outside of Relief

In Notice 2021-01, the DOL acknowledges that plan participants and beneficiaries may continue to encounter problems due to the pandemic in circumstances under which relief is no longer available under the Notice.  The DOL states that the “guiding principle” for administering employee benefit plans is to act reasonably, prudently, and in the best interest of workers and their families.  Therefore, the DOL states plan fiduciaries should “make reasonable accommodations to prevent the loss of or undue delay in payment of benefits…” and should “take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames.”