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DOL Issues Last-Minute Deadline Extensions For Benefit Plans, But Implementation May Prove Challenging

Just two days before key COVID-19 benefit plan deadline extensions were set to expire, the Department of Labor (“DOL”) issued last-minute guidance extending the deadlines once again. However, the extension implemented might cause administrative headaches for employers, carriers, and plan service providers, as the DOL wants to apply the extension on an individual-by-individual basis.

Last year, the DOL and the Internal Revenue Service (“IRS”) jointly issued guidance extending deadlines for electing COBRA, making COBRA premium payments, sending COBRA election notices, notifying plans of qualifying events and disability determinations, HIPAA special enrollment, and claims appeals. The extensions were effective beginning on March 1, 2020, and were set to expire either: (1) 60 days following the end of the COVID-19 National Emergency (the “Outbreak Period”); or (2) pursuant to ERISA statutory limitations, after one year (February 28, 2021). Although no one thought the National Emergency would last this long, the one-year expiration date has arrived, and many pressed the DOL and IRS to clarify whether the deadlines would continue to be extended.

Today, the DOL issued Disaster Relief Notice 2021-01 (the “Notice”) through the Employee Benefits Security Administration in order to satisfy the immediate need for guidance on whether the expiration of the deadline extensions would actually take effect on February 28, 2021. The Notice provides that, although the one-year expiration date will continue to apply, the one-year expiration will be implemented on an individual-by-individual basis. In other words, individuals with timeframes that are subject to the relief will qualify for extensions until the earlier of: (1) one year from the date they were first eligible for deadline relief, or (2) the end of the Outbreak Period. For example, if an individual was in the middle of or began a COBRA enrollment period as of March 1, 2020, that individual’s extension is set to expire on February 28, 2021 and his or her COBRA enrollment period will once again begin to run. However, if an individual’s COBRA enrollment period began September 1, 2020, that individual’s extension would be in effect until the earlier of August 31, 2021 or the end of the Outbreak Period.

In order to implement this new guidance, plan sponsors, carriers, and service providers should immediately begin tracking impacted individuals and plan participants. Employers will need to coordinate with legal counsel, carriers, third-party administrators, COBRA administrators, and other service providers to the related benefit plan. Additionally, employers should consider notifying participants of their new rights and obligations. For assistance with drafting or reviewing applicable notices and services agreements, or for help understanding how this new guidance might apply to your organization, please contact a McGrath North Employee Benefits attorney.