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The American Rescue Plan Act (ARPA), signed into law on March 11, 2021, requires employers to provide free COBRA coverage to employees (and family members) who qualify for COBRA due to an involuntary termination of employment or reduction in hours.  Employers are required to offer free COBRA coverage between April 1 and September 30, 2021 (the “Subsidy Period”).  This Advisory discusses employer obligations related to the subsidy – including new COBRA election periods and new COBRA notices – and how employers will be reimbursed for this 100% subsidized COBRA coverage through a payroll tax credit.
Continue Reading COBRA Subsidies Under the American Rescue Plan Act

On January 12, 2021, the Department of Labor (DOL) issued long-awaited guidance for retirement plan fiduciaries that is relevant to any employer who sponsors a retirement plan that is subject to the fiduciary requirements of ERISA, including 401(k), 403(b), profit sharing, and defined benefit pension plans.  Of particular import, the guidance addresses best practices for locating and distributing retirement plan benefits to missing or non-responsive participants. The DOL also includes other helpful guidance, as discussed in more detail below.

Continue Reading DOL Issues Guidance on Missing Participants for Retirement Plans

As described in our client advisories of May 6, 2020 and February 11, 2021, the Department of Labor (the “DOL”) temporarily suspended the deadlines for employee benefit plan participants to exercise HIPAA special enrollment rights, elect and pay premiums for COBRA continuation coverage, file claims for benefits and appeal benefit claim denials (each, a “Qualifying Event”).

Under this relief, plan administrators were directed to disregard the period from March 1, 2020 until 60 days after the end of the federally declared national emergency for COVID-19 (the “Outbreak Period”) in determining such deadlines.  Because the statutes authorizing this relief impose a one-year limit on the period that may be disregarded in determining these deadlines, as described in our client advisory of February 11, 2021, the Outbreak Period was generally expected to end on February 28, 2021, absent further action from the DOL.

In a last-minute change of course, the DOL is now requiring the relief period instead to be the one-year period beginning on the normally applicable deadline, or 60 days after the end of the federally declared national emergency for COVID-19, if sooner.  As of this writing, the federally declared national emergency is still in place and the government has given no sign of when that declaration might end.  In other words, the relief period is to be measured on an event-by-event basis with respect to each participant and beneficiary instead of an overall deadline that applies to the plan as a whole.

This means that a participant who became eligible for COBRA on January 30, 2021, and who normally would have had until March 31, 2021 to elect COBRA, will have until March 31, 2022 to do so (assuming the national emergency does not end before January 30, 2022).  More significantly, a participant who experiences a Qualifying Event on or after March 1, 2021 (i.e., more than a year after the start of the Outbreak Period) will also be eligible for the relief.

In apparent recognition of its strained interpretation of its own original guidance regarding extension of certain plan deadlines, the DOL observed that plan disclosures issued during the pandemic may need to be reissued or amended if such disclosures did not accurately inform participants and beneficiaries of when actions are required.

Finally, the DOL observed that plan fiduciaries should make reasonable accommodations to prevent the loss or undue delay in payment of benefits and minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames.  Specific examples of accommodations in the DOL guidance include affirmatively sending the affected participant or beneficiary a notice regarding the end of the relief period and, in the case of a group health plan, informing the affected participant or beneficiary of other coverage options, including through the Health Insurance Marketplace in the participant’s state.  It is unclear from this guidance whether the DOL expects plan fiduciaries to make other types of accommodations, such as extending deadlines beyond the statutory limits as facts and circumstances may warrant.

Based on the DOL’s latest guidance, plan administrators should be prepared to continue contending with the uncertainty and administrative difficulties created by the Outbreak Period relief until the President declares an end to the national emergency for COVID-19.

If you have any questions about the DOL’s latest interpretation of the Outbreak Period relief, or if you would like assistance in reviewing, preparing or revising communications to plan participants about the relief, please contact a member of our Employee Benefits Group.


Continue Reading DOL Issues New Guidance on the Duration of its COVID-19 Outbreak Period Relief

As described in our client advisory of May 6, 2020, the Department of Labor (the “DOL”) temporarily suspended the deadlines for employee benefit plan participants to exercise HIPAA special enrollment rights, elect and pay premiums for COBRA continuation coverage, file claims for benefits and appeal benefit claim denials.  This relief began on March 1, 2020 and, unless further extended by the DOL, will end on February 28, 2021 (the “Outbreak Period”).

If the Outbreak Period is not extended, then, effective March 1, 2021, the clock will begin ticking on deadlines that were suspended during the Outbreak Period.  For example, if a participant became eligible for COBRA continuation coverage on February 1, 2020, the 60-day period for electing such coverage, which in any other year would have ended on March 31, 2020, will now end on March 31, 2021 (i.e., the last day of the 60-day period which began on February 1, 2020 and includes (i) 29 days before the start of the Outbreak Period and (ii) 31 days after the end of the Outbreak Period).
Continue Reading DOL Outbreak Period Relief for Employee Benefit Plan Participants Scheduled to End Soon

On December 27, 2020, the President signed into law the Consolidated Appropriations Act, 2021 (the “Act”), the latest major piece of legislation passed by Congress in response to the coronavirus pandemic. This advisory describes certain provisions of the Act affecting retirement plans and other employee benefits.  In a separate advisory, we described the Act’s impact on health and welfare plans, including health and dependent care flexible spending arrangements.

Relief from Partial Terminations for Retirement Plans

When a retirement plan experiences a partial termination, affected participants must become fully vested in their accrued benefits. Ordinarily, the Internal Revenue Service uses a rebuttable presumption that a partial termination occurs in a plan year in which there is a 20% or greater reduction in the number of participants. Under the Act, a plan will not be treated as having a partial termination during any plan year which includes the period beginning on March 13, 2020, and ending on March 31, 2021, if the number of active participants covered by the plan on March 31, 2021 is at least 80% of the number of active participants covered by the plan on March 13, 2020.

Special Disaster Relief for Retirement Plans


Continue Reading New Stimulus Legislation Affects Retirement Plans and Other Employee Benefits

On December 27, 2020, the President signed into law the Consolidated Appropriations Act, 2021 (the “Act”), the latest major piece of legislation passedby Congress in response to the coronavirus pandemic. This advisory describes certain provisions of the Act affecting health and welfare plans, including health and dependent care flexible spending arrangements (“FSAs”).  In a separate advisory, we will describe the Act’s impact on retirement plans and other employee benefits.
Continue Reading New Stimulus Legislation Affects Health and Welfare Plans, including Flexible Spending Arrangements

The IRS recently issued further guidance under the CARES Act expanding the categories of individuals eligible for coronavirus-related plan distributions and loans, and providing additional administrative guidance on relief offered under the Act.

Background

As described in our April 3, 2020 Advisory, the CARES Act:

  • eliminates the 10% early withdrawal penalty on up to $100,000 in coronavirus-related distributions for qualifying individuals;
  • allows qualifying individuals to include coronavirus-related distributions in income over three years;
  • allows qualifying individuals to repay coronavirus-related distributions to a retirement plan in one or more installments within three years;


Continue Reading IRS Issues Guidance on CARES Act for Retirement Plans

In response to the COVID-19 outbreak, Congress, the Department of Labor (“DOL”) and the Internal Revenue Service (“IRS”) have each offered temporary relief from certain legal requirements applicable to employee benefit plans. Some of this temporary relief impacts participants’ rights under ERISA-covered employee benefit plans.

This Advisory focuses on the impact of the temporary relief on ERISA participant notice requirements, and also briefly summarizes that temporary relief.

Continue Reading COVID-19 Relief Triggers ERISA Participant Notice Requirements

On June 3, the Internal Revenue Service (“IRS”) issued Notice 2020-24 providing temporary relief from the physical presence requirement for participant elections that are required to be witnessed by a plan representative or a notary public, including spousal consents.  The relief covers the period from January 1, 2020 through December 31, 2020 (the “Relief Period”).  While specifically intended to facilitate the payment of coronavirus-related distributions and plan loans under the CARES Act, as described in our Advisory of April 3, 2020, Notice 2020-24 applies to any participant election that requires the signature of an individual to be witnessed in the physical presence of a plan representative or notary.

Continue Reading IRS Issues Temporary Relief from Physical Presence Requirement for Spousal Consents Under Retirement Plans