Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak

Cited as:85 FR 26351
Court:Employee Benefits Security Administration, Internal Revenue Service
Publication Date:04 May 2020
Record Number:2020-09399
Federal Register, Volume 85 Issue 86 (Monday, May 4, 2020)
[Federal Register Volume 85, Number 86 (Monday, May 4, 2020)]
                [Rules and Regulations]
                [Pages 26351-26355]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2020-09399]
                =======================================================================
                -----------------------------------------------------------------------
                DEPARTMENT OF THE TREASURY
                Internal Revenue Service
                26 CFR Part 54
                DEPARTMENT OF LABOR
                Employee Benefits Security Administration
                29 CFR Parts 2560 and 2590
                Extension of Certain Timeframes for Employee Benefit Plans,
                Participants, and Beneficiaries Affected by the COVID-19 Outbreak
                AGENCY: Employee Benefits Security Administration, Department of Labor;
                [[Page 26352]]
                Internal Revenue Service, Department of the Treasury.
                ACTION: Notification of relief; extension of timeframes.
                -----------------------------------------------------------------------
                SUMMARY: This document announces the extension of certain timeframes
                under the Employee Retirement Income Security Act and the Internal
                Revenue Code for group health plans, disability and other welfare
                plans, pension plans, and participants and beneficiaries of these plans
                during the COVID-19 National Emergency.
                DATES: May 4, 2020.
                FOR FURTHER INFORMATION CONTACT: Department of Labor, Elizabeth
                Schumacher or David Sydlik, Office of Health Plan Standards and
                Compliance Assistance, Employee Benefits Security Administration, at
                202-693-8335, and Thomas Hindmarch, Office of Regulations and
                Interpretations, Employee Benefits Security Administration, at 202-693-
                8500; or William Fischer, Department of the Treasury, Internal Revenue
                Service, Office of Chief Counsel (Employee Benefits, Exempt
                Organizations and Employment Taxes) at 202-317-5500.
                SUPPLEMENTARY INFORMATION:
                I. Purpose
                 On March 13, 2020, President Trump issued the Proclamation on
                Declaring a National Emergency Concerning the Novel Coronavirus Disease
                (COVID-19) Outbreak \1\ and by separate letter made a determination,
                under section 501(b) of the Robert T. Stafford Disaster Relief and
                Emergency Assistance Act, 42 U.S.C. 5121 et seq., that a national
                emergency exists nationwide beginning March 1, 2020, as the result of
                the COVID-19 outbreak (the National Emergency).\2\ As a result of that
                determination, the Federal Emergency Management Agency (FEMA) issued
                emergency declarations for every state, territory, and possession of
                the United States.\3\
                ---------------------------------------------------------------------------
                 \1\ Available at https://www.whitehouse.gov/presidential-actions/proclamation-declaring-national-emergency-concerning-novel-coronavirus-disease-covid-19-outbreak/.
                 \2\ March 13, 2020 letter from President Trump to Secretaries of
                the Departments of Homeland Security, the Treasury, and Health and
                Human Services and the Administrator of the Federal Emergency
                Management Agency, available at https://www.whitehouse.gov/briefings-statements/letter-president-donald-j-trump-emergency-determination-stafford-act/.
                 \3\ FEMA Release Number HQ-20-017-FactSheet available at https://www.fema.gov/news-release/2020/03/13/covid-19-emergency-declaration.
                ---------------------------------------------------------------------------
                 As a result of the National Emergency, participants and
                beneficiaries covered by group health plans, disability or other
                employee welfare benefit plans, and employee pension benefit plans may
                encounter problems in exercising their health coverage portability and
                continuation coverage rights, or in filing or perfecting their benefit
                claims. Recognizing the numerous challenges participants and
                beneficiaries already face as a result of the National Emergency, it is
                important that the Employee Benefits Security Administration,
                Department of Labor, Internal Revenue Service, and Department of the
                Treasury (the Agencies) take steps to minimize the possibility of
                individuals losing benefits because of a failure to comply with certain
                pre-established timeframes. Similarly, the Agencies recognize that
                affected group health plans may have difficulty in complying with
                certain notice obligations.
                 Accordingly, under the authority of section 518 of the Employee
                Retirement Income Security Act of 1974 (ERISA) and section 7508A(b) of
                the Internal Revenue Code of 1986 (the Code), the Agencies are
                extending certain timeframes otherwise applicable to group health
                plans, disability and other welfare plans, pension plans, and their
                participants and beneficiaries under ERISA and the Code.\4\
                ---------------------------------------------------------------------------
                 \4\ ERISA section 518 and Code section 7508A(b) generally
                provide that, in the case of an employee benefit plan, sponsor,
                administrator, participant, beneficiary, or other person with
                respect to such a plan affected by a Presidentially declared
                disaster, notwithstanding any other provision of law, the
                Secretaries of Labor and the Treasury may prescribe (by notice or
                otherwise) a period of up to one year that may be disregarded in
                determining the date by which any action is required or permitted to
                be completed. Section 518 of ERISA and section 7508A(b) of the Code
                further provide that no plan shall be treated as failing to be
                operated in accordance with the terms of the plan solely as a result
                of complying with the postponement of a deadline under those
                sections.
                ---------------------------------------------------------------------------
                 The Agencies believe that such relief is immediately needed to
                preserve and protect the benefits of participants and beneficiaries in
                all employee benefit plans across the United States during the National
                Emergency. Accordingly, the Agencies have determined, pursuant to
                section 553 of the Administrative Procedure Act, 5 U.S.C. 553(b)(3)(A),
                (B) and 553(d), that there is good cause for granting the relief
                provided by this document effective immediately upon publication, and
                that notice and public participation may result in undue delay and,
                therefore, be contrary to the public interest.\5\
                ---------------------------------------------------------------------------
                 \5\ Good cause exists for the same reasons underlying the
                issuance of the March 13, 2020 Proclamation on Declaring a National
                Emergency Concerning the Coronavirus Disease 2019 (COVID-19)
                Outbreak and the determination, under section 501(b) of the Robert
                T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C.
                5121, et seq., that a national emergency exists nationwide as a
                result of the COVID-19 pandemic, and the same reasons underlying the
                issuance of the January 31, 2020 declaration that a public health
                emergency exists under section 319 of the Public Health Service Act
                (PHS Act).
                ---------------------------------------------------------------------------
                 This document has been reviewed by the Department of Health and
                Human Services (HHS), which has advised the Agencies that HHS concurs
                with the relief specified in this document.\6\ HHS has advised the
                Agencies that HHS will exercise enforcement discretion to adopt a
                temporary policy of measured enforcement to extend similar timeframes
                otherwise applicable to non-Federal governmental group health plans and
                health insurance issuers offering coverage in connection with a group
                health plan, and their participants, beneficiaries and enrollees under
                applicable provisions of the Public Health Service Act (PHS Act). HHS
                has advised the Agencies that HHS encourages plan sponsors of non-
                Federal governmental group health plans to provide relief similar to
                that specified in this document to participants and beneficiaries, and
                encourages states and health insurance issuers offering coverage in
                connection with a group health plan to enforce and operate,
                respectively, in a manner consistent with the relief provided in this
                document. HHS has also advised the Agencies that HHS will not consider
                a state to have failed to substantially enforce the applicable
                provisions of title XXVII of the PHS Act if the state takes such an
                approach.
                ---------------------------------------------------------------------------
                 \6\ Section 104 of the Title I of Health Insurance Portability
                and Accountability Act of 1996 (HIPAA) requires that the Secretaries
                of Labor, the Treasury, and Health and Human Services (the
                Departments) ensure through an interagency Memorandum of
                Understanding (MOU) that regulations, rulings, and interpretations
                issued by each of the Departments relating to the same matter over
                which two or more departments have jurisdiction, are administered so
                as to have the same effect at all times. Under section 104, the
                Departments, through the MOU, are to provide for coordination of
                policies relating to enforcement of the same requirements in order
                to have a coordinated enforcement strategy that avoids duplication
                of enforcement efforts and assigns priorities in enforcement. See
                section 104 of HIPAA and Memorandum of Understanding applicable to
                Title XXVII of the PHS Act, Part 7 of ERISA, and Chapter 100 of the
                Code, published at 64 FR 70164, December 15, 1999.
                ---------------------------------------------------------------------------
                 The relief provided by this document supplements other COVID-19
                guidance issued by the Agencies, which can be accessed on the internet
                at: https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/disaster-relief and https://www.irs.gov/coronavirus.
                II. Background
                 Title I of the Health Insurance Portability and Accountability Act
                of 1996 (HIPAA) provides portability of health coverage by, among other
                things,
                [[Page 26353]]
                requiring special enrollment rights into group health plans upon the
                loss of eligibility of coverage. ERISA section 701, Code section 9801,
                29 CFR 2590.701-6, 26 CFR 54.9801-6. Title X of the Consolidated
                Omnibus Budget Reconciliation Act of 1985 (COBRA) permits qualified
                beneficiaries who lose coverage under a group health plan to elect
                continuation health coverage. ERISA section 601, Code section 4980B, 26
                CFR 54.4980B-1. Section 503 of ERISA and 29 CFR 2560.503-1 require
                employee benefit plans subject to Title I of ERISA to establish and
                maintain reasonable procedures governing the determination and appeal
                of claims for benefits under the plan. Section 2719 of the PHS Act,
                incorporated into ERISA by ERISA section 715, and into the Code by Code
                section 9815, imposes additional rights and obligations with respect to
                internal claims and appeals and external review for non-grandfathered
                group health plans and health insurance issuers offering non-
                grandfathered group or individual health insurance coverage. See also
                29 CFR 2590.715-2719 and 26 CFR 54.9815-2719. All of the foregoing
                provisions include timing requirements for certain acts in connection
                with employee benefit plans, some of which are being modified by this
                document.
                A. Special Enrollment Timeframes
                 In general, HIPAA requires a special enrollment period in certain
                circumstances, including when an employee or dependent loses
                eligibility for any group health plan or other health insurance
                coverage in which the employee or the employee's dependents were
                previously enrolled (including coverage under Medicaid and the
                Children's Health Insurance Program), and when a person becomes a
                dependent of an eligible employee by birth, marriage, adoption, or
                placement for adoption. ERISA section 701(f), Code section 9801(f), 29
                CFR 2590.701-6, and 26 CFR 54.9801-6. Generally, group health plans
                must allow such individuals to enroll in the group health plan if they
                are otherwise eligible and if enrollment is requested within 30 days of
                the occurrence of the event (or within 60 days, in the case of the
                special enrollment rights added by the Children's Health Insurance
                Program Reauthorization Act of 2009). ERISA section 701(f), Code
                section 9801(f), 29 CFR 2590.701-6, and 26 CFR 54.9801-6.
                B. COBRA Timeframes
                 The COBRA continuation coverage provisions generally provide a
                qualified beneficiary a period of at least 60 days to elect COBRA
                continuation coverage under a group health plan. ERISA section 605 and
                Code section 4980B(f)(5). Plans are required to allow payment of
                premiums in monthly installments, and plans cannot require payment of
                premiums before 45 days after the day of the initial COBRA election.
                ERISA section 602(3) and Code section 4980B(f)(2)(C). COBRA
                continuation coverage may be terminated for failure to pay premiums
                timely. ERISA section 602(2)(C) and Code section 4980B(f)(2)(B)(iii).
                Under the COBRA rules, a premium is considered paid timely if it is
                made not later than 30 days after the first day of the period for which
                payment is being made. ERISA section 602(2)(C), Code section
                4980B(f)(2)(B)(iii), and 26 CFR 54.4980B-8 Q&A-5(a). Notice
                requirements prescribe time periods for employers to notify the plan of
                certain qualifying events and for individuals to notify the plan of
                certain qualifying events or a determination of disability. Notice
                requirements also prescribe a time period for plans to notify qualified
                beneficiaries of their rights to elect COBRA continuation coverage.
                ERISA section 606, Code section 4980B(f)(6), and 29 CFR 2590.606-3.
                C. Claims Procedure Timeframes
                 Section 503 of ERISA and 29 CFR 2560.503-1, as well as section 2719
                of the PHS Act, incorporated into ERISA by ERISA section 715 and 29 CFR
                2590.715-2719, and into the Code by Code section 9815 and 26 CFR
                54.9815-2719, require ERISA-covered employee benefit plans and non-
                grandfathered group health plans and health insurance issuers offering
                non-grandfathered group or individual health insurance coverage to
                establish and maintain a procedure governing the filing and initial
                disposition of benefit claims, and to provide claimants with a
                reasonable opportunity to appeal an adverse benefit determination to an
                appropriate named fiduciary. Plans may not have provisions that unduly
                inhibit or hamper the initiation or processing of claims for benefits.
                Further, group health plans and disability plans must provide claimants
                at least 180 days following receipt of an adverse benefit determination
                to appeal (60 days in the case of pension plans and other welfare
                benefit plans). 29 CFR 2560.503-1(h)(2)(i) and (h)(3)(i), 29 CFR
                2590.715-2719(b)(2)(ii)(C), and 26 CFR 54.9815-2719(b)(2)(ii)(C).
                D. External Review Process Timeframes
                 PHS Act section 2719, incorporated into ERISA by ERISA section 715
                and into the Code by Code section 9815, sets out standards for external
                review that apply to non-grandfathered group health plans and health
                insurance issuers offering non-grandfathered group or individual health
                insurance coverage and provides for either a state external review
                process or a Federal external review process. Standards for external
                review processes and timeframes for submitting claims to the
                independent reviewer for group health plans or health insurance issuers
                may vary depending on whether a plan uses a State or Federal external
                review process. For plans or issuers that use the Federal external
                review process, the process must allow at least four months after the
                receipt of a notice of an adverse benefit determination or final
                internal adverse benefit determination for a request for an external
                review to be filed. 29 CFR 2590.715-2719(d)(2)(i) and 26 CFR 54.9815-
                2719(d)(2)(i). The Federal external review process also provides for a
                preliminary review of a request for external review. The regulation
                provides that if such request is not complete, the Federal external
                review process must provide for a notification that describes the
                information or materials needed to make the request complete, and the
                plan or issuer must allow a claimant to perfect the request for
                external review within the four-month filing period or within the 48-
                hour period following the receipt of the notification, whichever is
                later. 29 CFR 2590.715-2719(d)(2)(ii)(B) and 26 CFR 54.9815-
                2719(d)(2)(ii)(B).
                III. Relief
                A. Relief for Plan Participants, Beneficiaries, Qualified
                Beneficiaries, and Claimants
                 Subject to the statutory duration limitation in ERISA section 518
                and Code section 7508A,\7\ all group health plans, disability and other
                employee welfare benefit plans, and employee pension benefit plans
                subject to ERISA or the Code must disregard the period from March 1,
                2020 until sixty (60) days after the announced end of the National
                Emergency or such other date announced by the Agencies in a future
                notification (the ``Outbreak Period'') \8\ for all plan participants,
                beneficiaries, qualified beneficiaries, or claimants wherever located
                in determining the following periods and dates--
                ---------------------------------------------------------------------------
                 \7\ See footnote 4, supra.
                 \8\ To the extent there are different Outbreak Period end dates
                for different parts of the country, the Agencies will issue
                additional guidance regarding the application of the relief in this
                document.
                ---------------------------------------------------------------------------
                 (1) The 30-day period (or 60-day period, if applicable) to request
                special enrollment under ERISA section 701(f) and Code section 9801(f),
                [[Page 26354]]
                 (2) The 60-day election period for COBRA continuation coverage
                under ERISA section 605 and Code section 4980B(f)(5),\9\
                ---------------------------------------------------------------------------
                 \9\ The term ``election period'' is defined as ``the period
                which--(A) begins not later than the date on which coverage
                terminates under the plan by reason of a qualifying event, (B) is of
                at least 60 days' duration, and (C) ends not earlier than 60 days
                after the later of--(i) the date described in subparagraph (A), or
                (ii) in the case of any qualified beneficiary who receives notice
                under section 1166(a)(4) of this title, the date of such notice.''
                29 U.S.C. 1165(a)(1), ERISA section 605(a)(1). See also Code section
                4980B(f)(5).
                ---------------------------------------------------------------------------
                 (3) The date for making COBRA premium payments pursuant to ERISA
                section 602(2)(C) and (3) and Code section 4980B(f)(2)(B)(iii) and
                (C),\10\
                ---------------------------------------------------------------------------
                 \10\ Under this provision, the group health plan must treat the
                COBRA premium payments as timely paid if paid in accordance with the
                periods and dates set forth in this document. Regarding coverage
                during the election period and before an election is made, see 26
                CFR 54.4980B-6, Q&A 3; during the period between the election and
                payment of the premium, see 26 CFR 54.4980B-8, Q&A 5(c).
                ---------------------------------------------------------------------------
                 (4) The date for individuals to notify the plan of a qualifying
                event or determination of disability under ERISA section 606(a)(3) and
                Code section 4980B(f)(6)(C),
                 (5) The date within which individuals may file a benefit claim
                under the plan's claims procedure pursuant to 29 CFR 2560.503-1,
                 (6) The date within which claimants may file an appeal of an
                adverse benefit determination under the plan's claims procedure
                pursuant to 29 CFR 2560.503-1(h),
                 (7) The date within which claimants may file a request for an
                external review after receipt of an adverse benefit determination or
                final internal adverse benefit determination pursuant to 29 CFR
                2590.715-2719(d)(2)(i) and 26 CFR 54.9815-2719(d)(2)(i), and
                 (8) The date within which a claimant may file information to
                perfect a request for external review upon a finding that the request
                was not complete pursuant to 29 CFR 2590.715-2719(d)(2)(ii) and 26 CFR
                54.9815-2719(d)(2)(ii).
                B. Relief for Group Health Plans
                 With respect to group health plans, and their sponsors and
                administrators, the Outbreak Period shall be disregarded when
                determining the date for providing a COBRA election notice under ERISA
                section 606(c) and Code section 4980B(f)(6)(D).
                C. Later Extensions
                 The Agencies will continue to monitor the effects of the Outbreak
                and may provide additional relief as warranted.
                IV. Examples
                 The following examples illustrate the timeframe for extensions
                required by this document. An assumed end date for the National
                Emergency was needed to make the examples clear and understandable.
                Accordingly, the Examples assume that the National Emergency ends on
                April 30, 2020, with the Outbreak Period ending on June 29, 2020 (the
                60th day after the end of the National Emergency). To the extent there
                are different Outbreak Period end dates for different parts of the
                country, the Agencies will issue additional guidance regarding the
                application of the relief in this document.
                 Example 1 (Electing COBRA). (i) Facts. Individual A works for
                Employer X and participates in X's group health plan. Due to the
                National Emergency, Individual A experiences a qualifying event for
                COBRA purposes as a result of a reduction of hours below the hours
                necessary to meet the group health plan's eligibility requirements and
                has no other coverage. Individual A is provided a COBRA election notice
                on April 1, 2020. What is the deadline for A to elect COBRA?
                 (ii) Conclusion. In Example 1, Individual A is eligible to elect
                COBRA coverage under Employer X's plan. The Outbreak Period is
                disregarded for purposes of determining Individual A's COBRA election
                period. The last day of Individual A's COBRA election period is 60 days
                after June 29, 2020, which is August 28, 2020.
                 Example 2 (Special enrollment period). (i) Facts. Individual B is
                eligible for, but previously declined participation in, her employer-
                sponsored group health plan. On March 31, 2020, Individual B gave birth
                and would like to enroll herself and the child into her employer's
                plan; however, open enrollment does not begin until November 15. When
                may Individual B exercise her special enrollment rights?
                 (ii) Conclusion. In Example 2, the Outbreak Period is disregarded
                for purposes of determining Individual B's special enrollment period.
                Individual B and her child qualify for special enrollment into her
                employer's plan as early as the date of the child's birth. Individual B
                may exercise her special enrollment rights for herself and her child
                into her employer's plan until 30 days after June 29, 2020, which is
                July 29, 2020, provided that she pays the premiums for any period of
                coverage.
                 Example 3 (COBRA premium payments). (i) Facts. On March 1, 2020,
                Individual C was receiving COBRA continuation coverage under a group
                health plan. More than 45 days had passed since Individual C had
                elected COBRA. Monthly premium payments are due by the first of the
                month. The plan does not permit qualified beneficiaries longer than the
                statutory 30-day grace period for making premium payments. Individual C
                made a timely February payment, but did not make the March payment or
                any subsequent payments during the Outbreak Period. As of July 1,
                Individual C has made no premium payments for March, April, May, or
                June. Does Individual C lose COBRA coverage, and if so for which
                month(s)?
                 (ii) Conclusion. In this Example 3, the Outbreak Period is
                disregarded for purposes of determining whether monthly COBRA premium
                installment payments are timely. Premium payments made by 30 days after
                June 29, 2020, which is July 29, 2020, for March, April, May, and June
                2020, are timely, and Individual C is entitled to COBRA continuation
                coverage for these months if she timely makes payment. Under the terms
                of the COBRA statute, premium payments are timely if made within 30
                days from the date they are first due. In calculating the 30-day
                period, however, the Outbreak Period is disregarded, and payments for
                March, April, May, and June are all deemed to be timely if they are
                made within 30 days after the end of the Outbreak Period. Accordingly,
                premium payments for four months (i.e., March, April, May, and June)
                are all due by July 29, 2020. Individual C is eligible to receive
                coverage under the terms of the plan during this interim period even
                though some or all of Individual C's premium payments may not be
                received until July 29, 2020. Since the due dates for Individual C's
                premiums would be postponed and Individual C's payment for premiums
                would be retroactive during the initial COBRA election period,
                Individual C's insurer or plan may not deny coverage, and may make
                retroactive payments for benefits and services received by the
                participant during this time.
                 Example 4 (COBRA premium payments). (i) Facts. Same facts as
                Example 3. By July 29, 2020, Individual C made a payment equal to two
                months' premiums. For how long does Individual C have COBRA
                continuation coverage?
                 (ii) Conclusion. Individual C is entitled to COBRA continuation
                coverage for March and April of 2020, the two months for which timely
                premium payments were made, and Individual C is not entitled to COBRA
                continuation coverage for any month after April 2020. Benefits and
                services
                [[Page 26355]]
                provided by the group health plan (e.g., doctors' visits or filled
                prescriptions) that occurred on or before April 30, 2020 would be
                covered under the terms of the plan. The plan would not be obligated to
                cover benefits or services that occurred after April 2020.
                 Example 5 (Claims for medical treatment under a group health plan).
                (i) Facts. Individual D is a participant in a group health plan. On
                March 1, 2020, Individual D received medical treatment for a condition
                covered under the plan, but a claim relating to the medical treatment
                was not submitted until April 1, 2021. Under the plan, claims must be
                submitted within 365 days of the participant's receipt of the medical
                treatment. Was Individual D's claim timely?
                 (ii) Conclusion. Yes. For purposes of determining the 365-day
                period applicable to Individual D's claim, the Outbreak Period is
                disregarded. Therefore, Individual D's last day to submit a claim is
                365 days after June 29, 2020, which is June 29, 2021, so Individual D's
                claim was timely.
                 Example 6 (Internal appeal--disability plan). (i) Facts. Individual
                E received a notification of an adverse benefit determination from
                Individual E's disability plan on January 28, 2020. The notification
                advised Individual E that there are 180 days within which to file an
                appeal. What is Individual E's appeal deadline?
                 (ii) Conclusion. When determining the 180-day period within which
                Individual E's appeal must be filed, the Outbreak Period is
                disregarded. Therefore, Individual E's last day to submit an appeal is
                148 days (180-32 days following January 28 to March 1) after June 29,
                2020, which is November 24, 2020.
                 Example 7 (Internal appeal--employee pension benefit plan). (i)
                Facts. Individual F received a notice of adverse benefit determination
                from Individual F's 401(k) plan on April 15, 2020. The notification
                advised Individual F that there are 60 days within which to file an
                appeal. What is Individual F's appeal deadline?
                 (ii) Conclusion. When determining the 60-day period within which
                Individual F's appeal must be filed, the Outbreak Period is
                disregarded. Therefore, Individual F's last day to submit an appeal is
                60 days after June 29, 2020, which is August 28, 2020.
                 Signed at Washington, DC, this 28th day of April, 2020.
                Eugene Rutledge,
                Assistant Secretary, Employee Benefits Security Administration,
                Department of Labor.
                Sunita Lough,
                Deputy Commissioner for Services and Enforcement, Internal Revenue
                Service, Department of the Treasury.
                [FR Doc. 2020-09399 Filed 4-30-20; 11:15 am]
                BILLING CODE P