Aligning itself with other circuit courts that have ruled on the issue, the Ninth Circuit recently held that ERISA does not bar forum selection clauses in benefit plans.  The background of the case and the Ninth Circuit’s ruling are straightforward.  Plaintiff filed a putative class action in the Northern District of California challenging the management of Wells Fargo’s 401(k) plan.  Wells Fargo moved to transfer venue to the District of Minnesota under the 401(k) plan’s forum selection clause.  The California district court granted the motion to transfer and Plaintiff sought a writ of mandamus to stop the transfer.

The Ninth Circuit unequivocally affirmed the transfer.  The Court reasoned that the permissive “may” in ERISA’s venue provision provides three options for a proper venue but mandates none of them.  Moreover, policy considerations support permitting contractual forum selection clauses: the clause at issue does not impinge on “ready access” to the courts (instead, it mandates it) and confining plan-related lawsuits to one jurisdiction furthers ERISA’s goal of uniform administration of benefit plans.

While the Ninth Circuit is certainly not the first to enforce a benefit plan’s forum selection clause (indeed, the Court recognized “near universal” agreement on the issue), this case is significant in two respects.  First, it dampens recent efforts in the lower courts to challenge forum selection clauses in ERISA plans.  It chips away further at prior case law disfavoring such clauses.  Echoing its conclusions in Dorman v. Charles Schwab – a 2019 decision enforcing a mandatory arbitration clause in an ERISA plan – the Court here classified judicial skepticism of forum selection clauses as a “relic” of a past era.

The case is Becker v. United States District Court, No. 20-72805, 2021 U.S. App. LEXIS 9495 (9th Cir. Apr. 1, 2021).

You didn’t know it was a thing?  Or maybe, like most, you just lost track of what day it is?  Or maybe it ranks somewhere behind New Beer’s Eve (the day before the end of prohibition) and National Tartan Day, both of which are most certainly things and also fall on April 6th.

If there was ever a year to celebrate National Employee Benefits Day, this is the year.  The last year needs no introduction, but it is worthwhile to take just a moment to acknowledge the role employee benefits and all the tireless employee benefit professionals have played in getting us through.

Last year showed us how central employer provided benefits are to our daily lives.  And in the time of the largest national crisis for most, employers, their benefits providers, and the entire system of employer-provided benefits rose to the occasion to provide flexibility and much-needed support to workers.  Whether it was voluntarily extending subsidized health coverage to those who would typically lose coverage because of a reduction in hours or termination, offering needed access to 401(k) assets through coronavirus related distributions and loans through the CARES Act, or allowing flexibility for mid-year changes in health care and flexible spending account elections, employers, vendors, and Washington, D.C. moved rapidly to respond.  At the same time, retirement plan fiduciaries weathered the increased threats of class action litigation over plan investment fees, new concerns related to protecting plan data, investment processes related to ESG funds and proxies, and a roller-coaster market.  Not to mention responding in real time to the ever expanding state and federal leave requirements.

So far, the year ahead appears to be full of its own twists and turns, albeit of a different vein.  As evidenced by the recent COBRA subsidy provisions in the American Rescue Plan Act of 2021, health care will continue to take center stage and the role of employer provided coverage against the backdrop of strengthened ACA Marketplaces, a bright spotlight on pharmacy benefits, transparency requirements, and rollouts of vaccines (and incentives) will keep us on our toes.  There will be other areas of focus for employers too—new opportunities to assist employees with student debt, expanding options in 401(k) plans such as withdrawals for birth and adoption assistance, and a new focus on voluntary benefits offerings alongside the traditional core offerings, plus new legislation around the bend on qualified retirement plans.  And as some begin the long march back to the office (and others continue to work remotely), we will confront pesky remote worker tax questions, a renewed focus on wellness benefits (including mental health), and a growing demand for financial wellness programs alongside changes that address our new normal, like the ability to pay for face masks, hand sanitizer and disinfecting wipes from our health flexible spending accounts.  There is much to do and no offseason for benefits professionals, but great opportunity to reevaluate benefit offerings, given changing employee needs and demands and a changing regulatory landscape under an ambitious new administration.

So, for now, take a minute and raise your copy of ERISA (and, of course, your favorite libation) to appreciate how much has been accomplished over the past year in the face of unchartered demands and stressors.  We are all looking forward to the year ahead for so many reasons and the changes (and opportunities) it brings in employee benefits and beyond.

All the way back in 2016, California passed legislation that employers who do not sponsor an employee-retirement plan must participate in a state-run retirement program. This program became known as CalSavers.

While there have been legal challenges to CalSavers, the program persists. The pilot phase of CalSavers launched in 2018 and the phase-in period started in 2020.  CalSavers provides an opportunity for employees to defer wages, through payroll deductions by the employer, to a state-run individual retirement savings account program. An employer is not required to participate in CalSavers if it sponsors or participates in a retirement plan such as a 401(k) plan or pension plan. In order to be exempt from CalSavers, an employer may sponsor a retirement plan for any of its employees; California employees need not be covered by the retirement plan in order for the employer to be exempt.

Last year, employers with over 100 employees received a small reprieve and had their deadline to adopt a retirement plan and file an exemption or enroll in CalSavers, extended to September 2020. However, to date, employers with 50 or more employees still have a deadline of June 30, 2021, and employers with 5 or more employees have a deadline of June 30, 2022.

Employers who fail to comply with the requirements of the California mandate may be fined by the California Franchise Tax Board. As such, it is important for employers with employees in California to either adopt a retirement plan and file an exemption or register with CalSavers in order to ensure they are in compliance by the applicable deadline.

If employers have questions about California’s retirement plan mandate or about employee benefits, contact a Jackson Lewis attorney to discuss.

The American Rescue Plan Act of 2021 includes a modified version of the Butch Lewis Act, referred to as the Emergency Pension Plan Relief Act of 2021 (EPPRA), which restores to financial health more than 100 failing multiemployer pension plans. However, the measure falls well short of any meaningful long-term funding reform.  More

The American Rescue Plan Act of 2021 expands upon some popular tax credit provisions and makes other changes to a key tax provision regarding compensation deduction limitations. These changes are summarized below.   More

The American Rescue Plan Act of 2021 (ARPA) is the latest federal COVID-19 relief bill, which the President signed into law on Thursday, March 11, 2021. ARPA includes new COBRA continuation coverage election, notice, and subsidy requirements; pension plan funding relief; and some cost-saving benefit opportunities employees may be able to leverage.  Some of these changes are required and could take effect as early as April 1, 2021, requiring immediate action by employers (or their insurers or administrators).  Other provisions are optional, enabling employers to weigh the costs and benefits in considering their implementation.   This is the first of a series of articles addressing the important employee benefit changes under ARPA, including employer tax credits, executive compensation changes, and multiemployer funding relief.

COBRA Premium Subsidies:  Fulfilling a commitment of the Biden Administration, ARPA includes COBRA subsidy provisions aimed at making health insurance coverage accessible and affordable.  Bearing a striking resemblance to the American Recovery and Reinvestment Act of 2009, ARPA creates a 6-month subsidy period (April 1 to September 30, 2021) during which certain “assistance eligible individuals” (AEI) may qualify for a 100% subsidy for COBRA coverage.  Qualifying AEI would pay no cost for monthly COBRA premiums for medical, dental, or vision coverage if the individual is eligible for COBRA coverage during the subsidy period.  The subsidy period does not extend the maximum COBRA coverage period.  ARPA simply suspends the AEI’s obligation to make COBRA premium payments for up to 6 months.

These rules are not optional for employer sponsored group health plans.  All group health plans subject to COBRA, except health flexible spending accounts (FSA), must provide this subsidized coverage.

The employer (or plan, in the case of a multi-employer plan; or insurer for non-ERISA fully-insured plans) has an obligation to provide this group health plan coverage under its plan, advances the premium cost, and recovers the cost of such coverage from the federal government by claiming a credit against its quarterly Medicare payroll tax liability.  The credit can be advanced and is refundable, meaning the entity can claim a refund if the subsidy exceeds the taxes due.

Only those qualified beneficiaries who trigger COBRA continuation coverage because of an involuntary termination of employment or a reduction in hours and whose current COBRA continuation coverage period would cover some or all of the subsidy period are considered AEI, but only if they elect COBRA coverage.  Individuals who qualify for COBRA because of voluntary termination, retirement, or death would not be considered AEI.

ARPA also creates an extended COBRA election period for AEI so even AEI who previously declined COBRA coverage, or whose coverage was terminated because of nonpayment of premiums, may enroll and receive the subsidized coverage for the length of the subsidy period.  This provision in particular will require careful administration to ensure compliance, given the previous COBRA deadline extensions and the recent re-starting of the clock, which we discuss here and here. ARPA does not change the fact that COBRA continuation coverage still can end because of other group health coverage, Medicare eligibility, and other circumstances.

ARPA imposes new notice requirements on group health plans, which provide AEI with the information they need to enroll in subsidized coverage.  There is a required notice of the availability of the subsidy, a notice of the extended election period for COBRA coverage, and a notice of the expiration of the subsidy.  The U.S. Department of Labor will issue model notices that plan administrators may use.

Group health plans may, but are not required to, allow AEI to enroll in different coverage options available from the employer, subject to certain conditions.  If offered, the notices would need to describe this option.

Affordable Care Act Premium Tax Credit Expansion:  Following the coverage theme noted above, ARPA also expands eligibility for Premium Tax Credits (PTCs) under Internal Revenue Code Section 36B.  These PTCs, which are part of the Affordable Care Act (ACA), make securing coverage through the Healthcare Marketplace or other state exchange more affordable.  Generally, the changes temporarily eliminate the phaseout of eligibility for households over 400% of the federal poverty level, reduce the contributions eligible households must make toward the premium cost, suspend the recapture of excess credits previously provided, and consider anyone who receives unemployment compensation during any week in 2021 as eligible.

For employers, this may mean more “full-time” employees claim the PTCs, which correspondingly may lead to greater scrutiny of employers’ ACA compliance by the IRS and a shift in employer group health plan enrollment.  This may increase the pool of individuals who qualify for subsidized coverage, a key trigger for employer shared responsibility penalties under the ACA. We recommend employers review and confirm their ACA compliance and reporting regularly to understand penalty risk and exposure, especially because of this change.

Increase in Dependent Care Assistance:  For the 2021 calendar year only, ARPA increases from $5,000 to $10,500 (from $2,500 to $5,250 in the case of a separate return filed by a married individual) the maximum amount that can be excluded from income under Section 129 of the tax code for qualifying dependent care expenses.  Employers who sponsor dependent care flexible spending arrangements may amend their plans on or before the last day of the plan year to allow their eligible employees to benefit from this increased limit.  Fiscal plan year sponsors will need to consider how to implement the relief given their plan year limits, noting that the increased contribution limit ends on December 31, 2021.  The Consolidated Appropriations Act, 2021, discussed here, permits employers to amend their Section 125 plans to permit mid-year election changes when the same normally would not be permitted.  That relief will need to be implemented in tandem with any increased limits allowed under ARPA.  For employers who decide not to increase the dependent care flexible spending account limit for 2021, employees still may qualify for the child and dependent care tax credit that was substantially enhanced and made refundable for 2021.

Pension Plan Funding Stabilization:  For employers who sponsor single employer defined benefit plans, ARPA provides several avenues to stabilize funding, including implementing 15-year (up from 7) amortization periods, fresh start rules, and an increase in interest rates used for minimum funding determinations.  These changes should reduce the minimum required contribution amounts, but would need to be weighed against the cost of obtaining an updated valuation, among other considerations.  Employers with these plans should consult with their plan actuaries.  As previously discussed, ARPA also includes long-awaited multiemployer funding relief.

If 2020 taught us anything, it is to be flexible and prepared for change.  Just three months into the 2021 calendar year, we now have the second substantial piece of legislation affecting the employee benefits area under our belts, and imminent implementation guidance.  This underscores how substantially the COVID-19 pandemic continues to change the value-proposition for employer provided benefits.

The U.S. Court of Appeals for the Second Circuit recently concluded that investment advisor Ruane Cunniff & Goldfarb must face a proposed class action under ERISA Section 502(a)(2) for breach of fiduciary duty relating to its alleged mismanagement of a profit-sharing plan sponsored by DST Systems, Inc.  Cooper v. Ruane Cunniff & Goldfarb Inc., No. 17-2805 (2d Cir. March 4, 2021).  The suit challenges Ruane’s allegedly “catastrophic over-allocation” of plan assets to shares in Valeant Pharmaceuticals, which dramatically declined in value in 2015-2016.

In 2016, Clive Cooper, who had been employed by DST and participated in DST’s profit-sharing plan, filed the lawsuit naming Ruane, DST, and others as Defendants.  Then Cooper successfully mediated his claims with DST and others, voluntarily dismissing his claims against all Defendants except Ruane.

In November 2016, Ruane moved for an order compelling Cooper to arbitrate his claims.  In 2017, the Southern District of New York granted Ruane’s motion to compel arbitration, based on Cooper’s agreement with DST to arbitrate all legal claims “relating to” his employment. The district court concluded that the fiduciary breach claims against Ruane related to Cooper’s employment with DST and that Ruane — a non-signatory to the arbitration agreement — was entitled under equitable estoppel to enforce the agreement against Cooper.

The Second Circuit reversed, holding that the breach of fiduciary duty claims did not “relate to” Cooper’s employment with DST under the terms of the arbitration agreement.  The opinion, by Judge Susan L. Carney and joined by Judge Raymond Lohier, explained that in an employment arbitration agreement a claim will “relate to” employment “only if the merits of that claim involve facts particular to an individual plaintiff’s own employment.” Here, the merits of Cooper’s claims did not involve such facts.  Cooper’s claims turned “entirely” on Ruane’s investment decisions and had “no connection” to Cooper’s work performance, evaluations, treatment by supervisors, his compensation, or the condition of his workplace.  The opinion further observed that Cooper’s claims could have been brought by other individuals and entities that were never employed by DST, including the Secretary of Labor or DST itself.

Judge Richard J. Sullivan filed a dissenting opinion, noting that the arbitration agreement did not clearly and unambiguously exclude Cooper’s breach of fiduciary duty claims from arbitration and that any ambiguity must be resolved in favor of arbitration.  Also, he would have affirmed the district court’s equitable estoppel holding, because of Cooper’s knowledge of Ruane’s role in managing the profit-sharing account and Cooper’s characterization of Ruane and DST as closely intertwined throughout the litigation.

We recently provided an update on the looming end date for COBRA and other deadline extensions and the uncertainty that continues to add to the administrative burdens without more clarity from the DOL and IRS.  Message received, apparently.

On behalf of the IRS, the DOL has now released Disaster Relief Notice 2021-01 that attempts to resolve a potential conflict with other statutory guidance under ERISA Section 518 and Code Section 7508A, which technically limits the allowable deadline extension period to a maximum of 1 year.  Unfortunately, this now results in new deadlines that can apply immediately and will differ based on individual events.  Fortunately, the DOL recognizes this will be complicated and burdensome to many so they also offer welcomed commentary that will provide relief to employers and plan administrators who take reasonable steps to comply.

Under the new guidance, COBRA, HIPAA Special Enrollment, claims and appeals timeframes, and other applicable deadlines that were previously extended indefinitely are now subject to a deadline that ends as of the earlier of: (1) one year from the date the deadline would have occurred on or after March 1, 2020, absent the previous extension guidance, or (2) the end of the Outbreak Period as previously defined.  The Notice provides a helpful example: if a qualified beneficiary would have originally been required to make a COBRA election to continue health insurance coverage by March 1, 2020, that person now technically will need to have made this election by March 1, 2021.  If the individual was to have made an election (or COBRA payment) by May 15, 2020, they will still have until May 15, 2021, (provided the Outbreak Period has not ended).  If that individual was recently terminated and ordinarily (by statute) would be required to make a COBRA election by April 1, 2021, that person will still have the ability to defer the election until the end of the Outbreak Period (or April 1, 2022, if that were to come first).  Employers have the same rolling 1-year maximum period to issue any required notifications.

The Notice also provides in part, “plan fiduciaries should make reasonable accommodations to prevent the loss or undue delay in payment of benefits…and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames.”  This opens up the possibility for additional extensions of deadlines where facts and circumstances would argue for additional flexibility.  The Notice helpfully notes that enforcement “will be marked with an emphasis on compliance assistance and includes grace periods and other relief”, as long as the plan administrators and other “fiduciaries…have acted in good faith and with reasonable diligence under the circumstances.”

What This Means to Employers and Plan Administrators

While the above language from the Notice acknowledges that the agencies understand and appreciate the complications this latest guidance creates for plan administrators to immediately restart the clock of daily COBRA, HIPAA, and other deadlines and for individuals who now must immediately catch up monthly COBRA premium obligations to maintain health insurance under the employer’s plan, the reality is that plan sponsors need to address administrative compliance with all deadlines now.

Plan sponsors should discuss next steps with counsel and third-party administrators to weigh all options and obligations. To be considered as acting in “good faith and with reasonable diligence,” we recommend following these steps:

  • Contact all COBRA and other third-party administrators to execute a plan of action for notification to all existing and COBRA eligible individuals regarding any applicable deadlines.
  • For individuals who have deferred making a COBRA election for any periods on or after March 1, 2020, consider whether new notices should be issued with updated coverage and rate options, and current election and payment deadlines. Consider starting the deadlines from the date that notice is mailed so the individual has a fair opportunity to evaluate the need for coverage.
  • For those who are already enrolled in COBRA but who have been deferring payment for coverage, provide initial notice and demand payment of all prior months’ premiums that may be owing. Where this involves many months, consider providing a period over which such individuals can make installment payments with a “grace period” for full and complete payment before COBRA coverage terminates.
  • Establish and communicate claims run-out periods for Flexible Spending Accounts and other applicable benefits.
  • Consider additional communications reminding all affected individuals of the availability of coverage via healthcare.gov, which may be a less expensive option for many and does not require retroactive enrollment to the date coverage was lost as required under COBRA.

We are available to help employers and plan administrators evaluate how this new guidance impacts their employee benefit plans.  Please contact a team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

I – Overview of the Butch Lewis Emergency Pension Plan Relief Act

The much-heralded Butch Lewis Emergency Pension Plan Relief Act of 2021 (the “Butch Lewis Act of 2021”) is closer to becoming a reality as part of the COVID-19 relief bill, which is set for a vote in the House of Representatives on February 26, 2021. The Butch Lewis Act of 2021 strives to address the plight of multiemployer and single-employer pension plans in the wake of COVID-19. Here we discuss only the multiemployer pension plans.  Representative Richard Neal (D-MA), chairman of the Ways and Means Committee of the House, proposed this bill. The bill has been fast-tracked.

Specifically, the proposed legislation offers several forms of relief to struggling multiemployer plans, including:

  1. Retention of a plan’s zone status at the beginning of the 2019 plan year for the plan years beginning in 2020 or 2021 (meaning that plans in “endangered or critical status” could delay updating the plan or schedules until the plan year beginning March 1, 2021);
  2. Extension of rehabilitation period by five years for plans in “endangered or critical status” for plan years beginning in 2020 or 2021 (effective for plan years beginning after December 31, 2019);
  3. Permission for plans to use a thirty-year amortization base to spread out losses (effective for plan years ending on or after February 29, 2020); and
  4. Freeze of the cost of living adjustment.

No provisions provide any monies to pension funds.

Rather, under the Special Financial Assistance Program for Financially Troubled Multiemployer Pension Plans, a portion of the Butch Lewis Act of 2021, monies will be provided to aid approximately 10 million Americans that participate in multiemployer pension plans, 1.3 million of whom are stuck in quickly sinking plans.

  1. What does this Program do? Through this program, the Pension Benefit Guaranty Corporation (the “PBGC”) would send payments directly to eligible multiemployer pension plans. It also would raise the PBGC multiemployer plans premium rate to $52 per participant as of 2031.
  2. Which multiemployer pension plans are eligible? These plans are eligible:
    • Plans in “critical and declining status” (within the meaning of section 305(b)(6) of ERISA) in any plan year beginning in 2020 through 2022.
    • Plans with a modified funded percentage of less than 40% with more retirees than active workers (less than 2:3 ratio) in any plan year from 2020 through 2022. Under the Act, modified funded percentage means “the percentage equal to a fraction the numerator of which is current value of plan assets and the denominator of which is current liabilities.”.
    • Plans that became insolvent (under section 418E of the Internal Revenue Code of 1986) after December 16, 2014, and have remained insolvent.

Eligible funds must apply to the Program no later than December 31, 2025.

  1. How much will eligible plans be receiving? After a plan’s application is approved, the PBGC will make a single, lump-sum payment in the amount required for the plan “to pay all benefits due during the period beginning on the date of enactment and ending on the last day of the plan year ending in 2051 with generally no reduction in a participant’s or beneficiary’s accrued benefit.” Essentially, the PBGC would be paying all pension benefits owed to retirees. There is no cap on this payment, and the funding predictions will be performed on a “deterministic basis.”
  2. Do the payments come with any obligations? Plans would have to reinstate benefits that were suspended and invest the monies in investment-grade bonds or other investments allowed by the PBGC.
  3. Does this Program affect employers? Not immediately. An employer’s withdrawal liability will still be calculated without consideration of the payment received under the Program until the plan year beginning 15 calendar years after the effective date of the special financial assistance. Eligible plans would have to provide employers with an estimate of the employer’s share of the plan’s unfunded vested benefits (accounting for any payment under the Program) as of the end of each plan year.

II – Practical Application of the Butch Lewis Emergency Pension Plan Relief Act

The Butch Lewis Act of 2021’s lofty goals seem promising, but employers and pension beneficiaries should be wondering how this Act will operate. Questions regarding how many pension plans will require relief, and practical considerations about how the PBGC will secure the funding to relieve the eligible plans, remain up in the air.

Interestingly, there may be fewer eligible funds than predicted. Milliman’s December 2020 Multiemployer Pension Funding Study concluded that the aggregate funded percentage for all multiemployer pension plans as of December 31, 2020, was 88%, the highest percentage it has been since before the 2008 market crash. However, this study relies predominately on data from Form 5500s from the 2018 and 2019 plan years. Per Milliman, the impact of COVID-19 is thus only reflected on investment returns, and not plan participation or contribution levels.

But the study provides valuable insight into the potential number of pension plans eligible for the Special Financial Assistance Program. Only 124 pension plans were designated as “critical and declining” as of December 31, 2020. These plans are projected to remain underfunded through 2025. From these figures, at least 124 pension plans will be eligible for the Special Financial Assistance Program.

The PBGC’s 2020 Annual Report reflects the looming insolvency of its Multiemployer Program by 2027. While federal funding from the Bipartisan American Miners Act of 2019 to the United Mine Workers of American 1974 Pension Plan staved off PBGC’s insolvency for an extra year, the reality remains dire. When the Multiemployer Program becomes insolvent, the PBC can no longer provide financial assistance to pay the current level of guaranteed benefits in insolvent plans.

This projected insolvency directly conflicts with the goals of the Butch Lewis Act of 2021, which would cause the PBGC to pay essentially all pension benefits owed to retirees from the date of the Act’s enactment to the last day of the plan year ending in 2051.

If the PBGC Multiemployer Program is on the brink of insolvency, how can it pay such hefty lump-sum payments to roughly 124 pension plans? The text of the Act does little to answer this question. The text of the Butch Lewis Act of 2021 provides that “an eighth fund shall be established for special financial assistance to multiemployer pension plans,” and that funds will be appropriated from the general fund to provide for the costs of providing financial assistance. And this eighth fund will be “credited with amounts from time to time as the Secretary of Treasury, in conjunction with the Director of the PBGC, determines appropriate, from the general fund of the Treasury.” Thus, the practical application of the Butch Lewis Act of 2021 remains unclear.

Please contact a team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

In May of 2020, the Department of Labor (DOL) and Internal Revenue Service (IRS) released joint-agency guidance that extended several important deadlines for employees, including COBRA election and payment deadlines, HIPAA Special Enrollment deadlines, and claims submission and appeal deadlines.  Under the guidance, plan administrators were required to extend the deadlines that would otherwise apply for any individuals affected between March 1, 2020, until 60 days after the end of the National Emergency (also known as the “Outbreak Period”).  Although the guidance was generally well-received when issued, it has since raised confusion and administrative difficulties due to the length of the Outbreak Period.  Keeping open-ended COBRA election periods without payment of employee premiums has caused administrative difficulties and resulted in varying approaches amongst administrators to ensure plans don’t experience claims risk for periods of now up to 12 months in many cases.

When the guidance was issued, no one imagined that the Outbreak Period would realistically last for more than a year.  Because it is now clear the National Emergency will continue for several more months, the problem that has inadvertently arisen is this extension guidance is now at risk of directly conflicting with statutory guidance under ERISA Section 518 and Code Section 7508A, as amended under the CARES Act to include public health emergencies, like COVID, to the list of circumstances (that previously were comprised of declared disasters, terrorism, and military action, etc.) that allow for up to a one-year extension for applicable deadlines such as those dealt with under the extension guidance above.  This maximum one-year extension for each of the above-referenced deadlines will end on February 28, 2021, however, there has been no direction from the agencies as to how or when plan administrators can reinstitute applicable deadlines.

The agencies know the issue and are evaluating alternatives, but we have been told they likely will not have a solution before February 28, 2021, the end of the maximum statutory one-year extension.  What are employers to do in the meantime?  This is a hotly debated topic amongst employers, attorneys, third-party administrators, and consultants.  Many suggest that employers have no choice but to now enforce the previous deadlines as if the Outbreak Period has ended.  Even that conclusion still leaves open questions, such as does that mean that affected individuals should now be given 60 days from March 1, 2021, to enroll in COBRA and make payments? An additional 30 days to make up all prior COBRA payments deferred for those previously enrolled?

Ultimately, plan sponsors should discuss their next steps with counsel and third-party administrators to weigh all options.  Employers can still rely on the guidance that exists today to support continuing to extend deadlines.  The National Emergency is ongoing and there is good reason to continue to extend all deadlines until further guidance is received.  Even if the DOL and IRS announce an end to the Outbreak Period based on the one-year statutory framework, the agencies typically provide a period of relief for those who in good faith comply with current guidance.  Many are anxiously awaiting directions and we will keep our readers apprised of any developments.

We are available to help employers and plan administrators understand and evaluate how these issues impact their employee benefit plans.  Please contact a team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.