On Friday, February 26, 2021, the Department of Labor (“DOL”) issued EBSA Disaster Relief Notice 2021-01 (the “2021 Notice”) to address expiring relief provisions previously provided in the DOL’s Disaster Relief Notice 2020-01 (“Notice 2020-01”) and the Notice of Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID–19 Outbreak (“Joint Notice”) (along with Notice 2020-01, the “2020 Notices”) issued by the DOL, the Department of the Treasury, and the Internal Revenue Service (IRS) (collectively “Agencies”).  This highly anticipated guidance provides a somewhat more expansive interpretation of the relief period prescribed under the 2020 Notices.

The 2020 Notices provided relief to employee benefit plans for certain actions that were required or permitted to be taken under Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Internal Revenue Code (“Code”) on or after March 1, 2020.  The relief provided pursuant to the Notices continues until sixty (60) days after the announced end of the COVID-19 National Emergency (as defined in the Joint Notice) or such other date announced by the relevant Agency or Agencies in a future notification (the “Outbreak Period”).  However, both ERISA and the Code further limit this relief to a one-year period, which many anticipated would expire on February 28, 2021.

Many in the benefits community believed that the one-year period referred to the period commencing on March 1, 2020 and ending on February 28, 2021.  However, Notice 2021-01 indicates that the one-year period actually runs from the date on which the individual or plan is “subject to the relief” on and after March 1, 2020.  The DOL provided the following examples for illustration:

  • If a qualified beneficiary would have been required to make a COBRA election by March 1, 2020, the Joint Notice delays that requirement until February 28, 2021, which is the earlier of 1 year from March 1, 2020 or the end of the Outbreak Period (which remains ongoing).
  • If a qualified beneficiary would have been required to make a COBRA election by March 1, 2021, the Joint Notice delays that election requirement until the earlier of 1 year from that date (i.e., March 1, 2022) or the end of the Outbreak Period.
  • If a plan would have been required to furnish a notice or disclosure by March 1, 2020, the relief under the Notices would end with respect to that notice or disclosure on February 28, 2021. The responsible plan fiduciary would be required to ensure that the notice or disclosure is furnished on or before March 1, 2021.

It’s not clear why the DOL refers to February 28th as the applicable deadline in one example and March 1st as the applicable deadline in another example, but we suggest treating the date that immediately precedes the first anniversary of the applicable date on which the party is subject to the relief as the expiration date of such relief to avoid exposure to liability.  It’s also not clear why the 2021 Notice refers to the date on which the party is “first eligible for relief” instead of any relevant date on which the party was otherwise required or permitted to take the action on or after March 1, 2020.  Surely, the DOL did not intend to mean that the party can only rely on one “disregarded period” for all actions that were required or permitted to be taken since March 1, 2020, but additional explanation would be welcome.

Even with this expanded interpretation of the one-year period, the DOL recognizes that the relief is limited.  Accordingly, the DOL reminds plan fiduciaries to act reasonably, prudently, and in the interest of the workers and their families.  Specifically, plan fiduciaries should make reasonable accommodations to prevent the loss of or undue delay in payment of benefits in such cases and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established timeframes.  The DOL provides the following nonexhaustive list of recommended action items:

  • Where the plan administrator or other responsible plan fiduciary knows, or should reasonably know, that the end of the relief period for an individual action is exposing a participant or beneficiary to a risk of losing protections, benefits, or rights under the plan, the administrator or other fiduciary should consider affirmatively sending a notice regarding the end of the relief period.
  • Plan administrators should consider reissuing or amending plan disclosures issued prior to or during the pandemic if such disclosures failed to provide accurate information regarding the time in which participants and beneficiaries were required to take action, e.g., COBRA election notices and claims procedure notices.
  • In the case of ERISA group health plans, plan administrators should consider ways to ensure that participants and beneficiaries who are losing coverage under their group health plans are made aware of other coverage options that may be available to them, including the opportunity to obtain coverage through the Health Insurance Marketplace in their state.

Importantly, the DOL acknowledges that there may be instances when full and timely compliance with ERISA’s disclosure and claims processing requirements by plans and service providers may not be possible.  The DOL indicated that its approach to enforcement of fiduciaries that have acted in good faith and with reasonable diligence under the circumstances will be marked by an emphasis on compliance assistance, with grace periods and other relief.

This may not be the end of the relief to be provided by the DOL.  The 2021 Notice indicates that the DOL will continue to assess the need for additional relief to protect plans and their participants.