Federal Government issues new benefit action periods in response to COVID-19 outbreak

In joint efforts with the Internal Revenue Service & U.S. Department of Health & Human Services, the public officials at the Employee Benefits Security Administration (EBSA) have introduced new legislation that will allow employees more time to make decisions about common benefit action periods. The Department of Labor realizes that, due to the outbreak of COVID-19, many businesses may run into temporary impediments in their effort to comply with various requirements and deadlines under ERISA. The guidance applies to employee benefit plans offered by their employer to extend 60 days after the end of the National Emergency caused by the pandemic.

Group health plans subject to ERISA will be given additional time in a relief effort to comply with certain deadlines pertaining to COBRA continuation. If an employee has been offered COBRA continuation as a result of a lay off or furlough on or after March 1, 2020, the qualified beneficiaries will now have 120 days AFTER the National Emergency has been lifted to elect continuation. This will virtually cover any qualified beneficiary under their former health plan for an extended period of time.

For example, let’s consider a situation where the National Emergency is no longer in place as of April 30th, 2020. The qualified beneficiary who works for a company and participated in the group health plan would have 60 days of an additional grace period to elect COBRA continuation due to the extension granted by the current pandemic. It is at that time where the traditional COBRA election period begins. Therefore, the last day this employee could elect coverage would be on August 28th, 2020 for a total of 120 days. The employee would have 45 days after the election date to send in premium retro to their original COBRA coverage start date.

The Department of Labor also announced an extension of deadlines for providing required notices & disclosures to plan participants under TITLE I of ERISA. Companies will now have the option to adjust their plans in terms of waiting periods for employees who are no longer working the required number of hours to be considered benefit eligible. Employer groups will now be required to make good faith efforts to notify new employees and current plan participants through means of electronic delivery to remain in compliance.

Finally, the Department of Labor will recognize any affected plan participant that encounters issues with their extension of benefits due to the outbreak. The DOL suggested that the guiding principle for plans must act reasonably, prudently and in the interest of the covered workers and their respective dependents who rely on health, retirement and other employee benefits for both their physical and financial wellbeing. The DOL has advised plan fiduciaries to make reasonable efforts to mitigate and prevent the loss of benefits for employees that are no longer working. This same concept applies to employees who were affected during their waiting period for benefits in an effort to not further delay an extension of coverage.

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