The DOL and the IRS Jointly Provide Relief from Certain Timeframes Applicable to Health and Welfare and Pension Plans
On April 28, 2020, the IRS and DOL issued a Final Rule extending certain timeframes under ERISA and the Internal Revenue Code for group health, disability and other welfare plans, pension plans, and the participants and beneficiaries under those plans. The timeframe extensions include, among other things, the time to elect COBRA and pay premiums, special enrollment timeframes under HIPPA and CHIPs, claims procedure timeframes, and certain external review process timeframes.?á Applicable plans must disregard the period from March 1, 2020 until 60 days after the announced end of the COVID-19 National Emergency for all plan participants, beneficiaries, qualified beneficiaries, or claimants wherever located in determining the enumerated time periods and dates and for providing COBRA election notices. ?áIn addition, Disaster Relief Notice 2020-01 was issued addressing the timeframe relief and addressing certain other COVID-19 relief. The Final Rule is available here:?áhttps://www.dol.gov/sites/dolgov/files/ebsa/temporary-postings/covid-19-final-rule.pdf. Disaster Relief Notice 2020-01 is available here:?áhttps://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/disaster-relief/ebsa-disaster-relief-notice-2020-01.
Although the CARES Act permitted the DOL to delay the deadline for distributing defined benefit plan Annual Funding Notices (“AFNs“), the DOL has not done so. For calendar year plans, that deadline is April 29, 2020 (because 2020 is a leap year). While AFNs generally can be distributed electronically, if there are participants or beneficiaries (including alternate payees) for whom electronic distribution is not possible, those AFNs must be mailed and postmarked no later than April 29.
Generally, a spouse must consent to a retirement plan participant?ÇÖs waiver of a qualified joint and survivor annuity or the designation of an optional form of benefit or an alternate beneficiary. The applicable regulations require this consent, even if signed electronically, to be witnessed in the physical presence of a plan representative or a notary public. Neither the IRS nor the DOL has issued guidance permitting the physical presence requirement to be satisfied by electronic means (for example, via webcam) even though numerous states now permit electronic notarizations. Employers should use care and consult with legal counsel when determining how to handle participants who are unable to satisfy the plan?ÇÖs current physical presence notarization requirements.
Federal agencies recently issued updated versions of certain documents that are required to be disclosed to individuals under applicable employer-sponsored group health plans. A set of FAQs regarding the Affordable Care Act (?Ç£ACA?Ç¥) was issued by the federal Departments of Labor (?Ç£DOL?Ç¥), Health and Human Services (?Ç£HHS?Ç¥), and Treasury (collectively, the ?Ç£Departments?Ç¥), which describe recent changes made by the Departments to the ?Ç£summary of benefits and coverage?Ç¥ template under the ACA (?Ç£SBC?Ç¥). Among other minor changes to the SBC, certain verbiage on the SBC and the associated uniform glossary were revised to reflect the prior elimination, as of January 1, 2019, of the tax penalty related to an individual?ÇÖs failure to comply with the so-called ?Ç£individual mandate?Ç¥ under the ACA. The FAQs also provide additional guidance regarding the updated SBC coverage examples calculator that was released by HHS late last year. The revised SBC and SBC coverage examples calculator each… Continue Reading
U.S. Department of Labor Proposes Extension of Applicability Date of New Disability Claims Procedures
On October 12, 2017, the DOL issued a proposed rule to delay for 90 days (through April 1, 2018) the applicability of the final regulations which amended the claims procedure requirements for ERISA-covered employee benefit plans that provide disability benefits. The final regulations were issued by the DOL in December 2016 and, as issued, would apply to claims for disability benefits filed on or after January 1, 2018. (Note: a more detailed discussion of the final regulations is available in our prior blog post.) Following the DOL’s issuance of the final regulations, various stakeholders asserted that the final regulations would drive up disability benefit plan costs and cause an increase in litigation and, in doing so, impair workers’ access to disability benefits. The DOL seeks public comments on its proposed 90-day delay of the applicability date of the final regulations in order to solicit additional public input and examine regulatory… Continue Reading
The DOL has issued a final regulation defining who is a ?Ç£fiduciary?Ç¥ of an employee benefit plan under ERISA (including an individual retirement account (?Ç£IRA?Ç¥)) as a result of giving investment advice to a plan or its participants or beneficiaries. The DOL also issued a number of related prohibited transaction exemptions (including the ?Ç£Best Interest Contract Exemption?Ç¥ and the ?Ç£Principal Transactions Exemption?Ç¥) and amendments to certain current prohibited transaction exemptions. The final rule broadly treats persons who provide investment advice or recommendations for a fee or other compensation with respect to assets of an employee benefit plan or IRA as fiduciaries in a wide array of advice relationships. Although the final rule maintains the same essential framework as the proposed rule, it includes a number of changes and clarifications which the White House has indicated are efforts by the DOL to ?Ç£[streamline] the rule and exemptions to reduce the compliance… Continue Reading
The U.S. Department of Labor published a final rule implementing ERISA’s annual funding notice requirement. Generally, administrators of defined benefit plans are required to furnish a funding notice each year to the PBGC, participants, beneficiaries, labor organizations, and participating employers. The funding notice must include the plan’s funding percentage, the plan’s assets and liabilities, a disclosure of events having a material effect on the plan’s assets and liabilities, and a general description of benefits that are eligible to be guaranteed by the PBGC. The final rule includes two model notices and is applicable to notices for plan years beginning on or after January 1, 2015, although plan administrators may rely on the final rule for prior years. Notices must be furnished no later than 120 days after the close of the plan year; different timing requirements apply to small plans. The final rule can be found here.
The U.S. Department of Labor (the ?Ç£DOL?Ç¥) has issued a notice of proposed rulemaking regarding a revision to the definition of ?Ç£spouse?Ç¥ under the Family and Medical Leave Act of 1993 (?Ç£FMLA?Ç¥).?á The revision is being proposed in light of the U.S. Supreme Court?ÇÖs decision in United States v. Windsor, which held Section 3 of the federal Defense of Marriage Act, restricting the definition of ?Ç£marriage?Ç¥ for federal law purposes to opposite-sex spouses, to be unconstitutional.?á Under the FMLA, eligible employees are permitted to take a leave of absence to care for a spouse in certain situations.?á Current regulations under the FMLA define ?Ç£spouse?Ç¥ based on the law of the state?áin which the employee resides; consequently, a same-sex couple who is married in a state or foreign jurisdiction that allows same-sex marriage is not treated as married under the FMLA if they reside in a state that does not recognize… Continue Reading