Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak
The IRS, together with the Employee Benefits Security Administration (EBSA), has issued guidance that extends tax-related deadlines for certain employee benefit plans, and their participants, due to the COVID-19 National Emergency.
Background. On March 13, 2020, the President declared a national emergency due to the novel coronavirus outbreak (COVID-19 National Emergency). This Presidentially declared emergency applies to every taxpayer in a U.S. state, territory or possession.
In the case of a pension or other employee benefit plan (collectively “Plans”), or any participant, beneficiary, or other person with respect to such plan (collectively “Participants”), affected by a Presidentially declared emergency, the IRS may specify a period of up to one year that may be disregarded (“Disregarded Period”) when determining the date by which Plans are required to completed any tax-related action under the Code. (Code Sec. 7508A(a))
Code Sec. 4980B imposes a tax on the failure of a group health plan (i.e. health insurance made available to employees by their employer) to meet certain coverage requirements with respect to any Participant. Code Sec. 4980B(f) provides the list of coverage requirements that must be met to avoid this tax.
Code Sec. 9801(f) provides that group health plans must provide a special enrollment period for eligible individuals and their dependents in specified circumstances.
Under Code Sec 9815 and its regs, group health plans must have an effective process for appeals of coverage determinations, claims, and adverse benefit determinations. The group health plan must, at a minimum:
a. Have in effect an internal claims process;
b. Provide appropriate notice to enrollees of available internal and external appeals processes, and the availability of any assistance with the appeals process;
c. Allow an enrollee to review his file, present evidence, and receive continued coverage pending the outcome of an appeal; and
d. Include certain external review protections.
Extended tax-related deadlines Here are some of the extended tax-related deadlines.
Subject to the 1-year statutory limitation in Code Sec. 7508A, all Plans must disregard the period beginning March 1, 2020 until 60 days after the announced end of the COVID-19 National Emergency (the Outbreak Period) for all Participants when determining the following periods and dates:
1. The 30-day period (or 60-day period, in the case of special enrollment rights added by the Children’s Health Insurance Program Reauthorization Act of 2009) to request special enrollment under Code Sec. 9801(f);
2. The 60-day election period for COBRA continuation coverage under Code Sec. 4980B(f)(5);
3. The date for making COBRA premium payments under Code Sec. 4980B(f)(2)(B)(iii) and Code Sec. 4980B(f)(2)(C);
4. The date for individuals to notify the plan of a qualifying event or determination of disability under Code Sec. 4980B(f)(6)(C);
5. 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 under Reg § 54.9815-2719(d)(2)(i); and
6. 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 Reg § 54.9815-2719(d)(2)(ii).
Relief for group health plans. With respect to group health plans, and their sponsors and administrators, the Outbreak Period must be disregarded when determining the date for providing a COBRA election notice under Code Sec. 4980B(f)(6)(D).
References: For group health plan requirements, see FTC 2d/FIN H-1325; United States Tax Reporter 98,154.