Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak
| Published date | 04 May 2020 |
| Citation | 85 FR 26351 |
| Record Number | 2020-09399 |
| Section | Rules and Regulations |
| Court | Employee Benefits Security Administration,Internal Revenue Service |
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]
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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.
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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\
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\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.
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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\
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\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.
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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\
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\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).
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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.
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\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.
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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--
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\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.
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(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\
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\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).
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(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\
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\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).
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(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]
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