As described in our May 1 blog post, in response to the COVID-19 pandemic, the Employee Benefits Security Administration, the Department of Labor (DOL), and the Internal Revenue Service, the Department of the Treasury (Agencies) recently issued guidance (Extension Guidance) providing emergency relief to employee benefit plans, participants, and beneficiaries for complying with certain deadline and notice requirements under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code. As part of this guidance, the Agencies released a notification of relief (Joint Notice), which significantly affects administration of all ERISA-governed health, welfare and retirement plans by tolling certain claim-related deadlines throughout the duration of the National Emergency declared by President Trump. This alert describes the impact of those deadline extensions and provides practical guidance for plan sponsors and fiduciaries to consider in complying with the Joint Notice. For analysis of the Extension Guidance’s implications on retirement plans, see part one of this series of alerts.
The Joint Notice
The Joint Notice tolls the following claim-related deadlines from March 1, 2020 until 60 days after the announcement of the end of the COVID-19 National Emergency or such other date announced by the Agencies (Outbreak Period):
- Filing a benefit claim or an appeal of an adverse benefit determination under a plan’s claims and appeals procedures pursuant to 29 CFR § 2560.503-1 and 29 CFR § 2560.503-1(h);
- Requesting external review of an adverse benefit determination or final internal adverse benefit determination under a medical plan pursuant to 29 CFR § 2590.715-2719(d)(2)(i) and 26 CFR § 54.9815-2719(d)(2)(i); and
- Filing information to perfect a request for external review pursuant to 29 CFR § 2590.715-2719(d)(2)(ii) and 29 CFR § 54.9815-2719(d)(2)(ii).
The tolling period is retroactive to March 1, 2020. Thus, the Joint Notice applies to claims under review, as well as claims that should or could have been filed, as of that date. Further, because the tolling period end date is dependent on when the President declares the end of the National Emergency, the tolling period may end at different times in different parts of the country. The Joint Notice states that the Agencies will issue additional guidance should that occur.
Guidance for Implementing the Joint Notice Requirements
Plan sponsors and claim fiduciaries have different roles to play in implementing the Joint Notice requirements. Plan sponsors can assist by ensuring that the plan’s procedures account for the Joint Notice’s requirements. Claim fiduciaries must be cognizant of their fiduciary duties in implementing the Joint Notice requirements. Below are some considerations to bear in mind when making the mandated changes to a plan’s administrative procedures.
- Consider amending or supplementing the plan’s claim procedures / summary plan description to:
- Include an explanation of the Joint Notice’s deadline extensions, or reference to a plan addendum that sets forth the deadline extensions and that may be modified as necessary to comply with federal law; and
- Ensure that the plan fiduciaries have maximum discretion in interpreting, implementing, and applying the deadline extensions and any further changes to federal law that affect plan administration.
- Administering claims:
- Carefully review plan terms and the facts of each claim to ensure proper calculation of deadlines. This is especially important when a claim-filing deadline is tied to a date of treatment or an injury / sickness, requiring a fact-specific analysis.
- Consider the DOL’s recommendation in the Extension Guidance that claim fiduciaries should make reasonable accommodations to prevent and minimize the possibility of participants losing, or experiencing undue delay in receiving, benefits payments if the participants may have encountered obstacles in pursuing benefit claims due to COVID-19 and thus failed to comply with pre-established timeframes (see Employee Benefits Security Administration Disaster Relief Notice 2020-01).
- Denial letters:
- For denial letters that have been issued on or since March 1, 2020:
- Consider issuing a supplemental letter notifying the claimant of the deadline extensions.
- Review denial letters that you have issued since March 1, 2020 on the basis that a claim or appeal was untimely to ensure that the timeliness analysis remains valid.
- For denial letters going forward:
- Revise or supplement future denial letters to explain the deadline extensions. Given the temporary nature of the Joint Notice, this could be done through an addendum to the letter.
- Carefully calculate the limitations period for filing a lawsuit for disability appeal denial letters that require such information. This may get very complicated because, again, the Outbreak Period end date may vary significantly from state to state.
- Third-party administrators:
- Ensure that the plan’s third-party administrators understand and are abiding by the Joint Notice requirements.
- Confirm that the plan’s third-party administrators are providing the correct language in their letters and in response to any phone or web-based inquiries.
- Document all communications with third-party administrators regarding implementation of the Joint Notice.
- Challenges to claim administration:
- Be prepared for administrative challenges related to tracking different Outbreak Period end dates for different parts of the country.
- Be prepared for disputes over the deadlines for submitting claims, appeals, external review requests, and information to perfect external review requests, including arguments that correspondence to claimants did not communicate a clear deadline or were otherwise confusing, inconsistent, or misleading.
The Joint Notice brings numerous changes and administrative challenges to claim administration. If you have questions about implementing the requirements, please contact us. Faegre Drinker attorneys are here to assist.
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