By Sheri Pullen and our Partners at ReedGroup
The Department of Labor’s Employee Benefits Security Department (EBSA) has published EBSA Disaster Relief Notice 2021-01, which provides updated guidance regarding Employee Retirement Income Security Act (ERISA) disability claim timelines.
History
Last spring, in response to the COVID-19 pandemic, the Departments of Labor and Treasury published guidance extending certain timeframes under ERISA and the Internal Revenue Code (IRC) for various employee benefit plans, including long- and short-term disability, as well as participants and beneficiaries of these plans. This guidance included:
As explained in our initial posting about the guidance, the rule suspended certain claim procedure deadlines, directing plans to “disregard” the “Outbreak Period,” defined as March 1, 2020 until 60 days after the announced end of the COVID-19 national emergency (or other date indicated by an appropriate federal agency). Per ERISA section 518, as amended by section 3607 of the Coronavirus Aid, Relief and Economic Security (CARES) Act, the maximum amount of time that can be disregarded from such deadlines is one year.
It’s been a year, what now?
As the pandemic and associated national emergency persisted months longer than most of us anticipated, employers and disability insurers and claims administrators have been wondering what would happen at the one-year mark. Would the period to be disregarded when calculating ERISA claims and appeal deadlines be ended universally on February 28, 2021, restarting the clock for all deadlines that had been tolled? Or would each claimant and deadline have their own unique calculation for the timeframe to be disregarded, spanning up to one year from the specific deadline?
This new EBSA notice confirms the latter–each individual deadline can be suspended (tolled) for a maximum of one year, assuming the Outbreak Period hasn’t already ended. Although this update from EBSA has been eagerly anticipated by employers and disability administrators alike, it might not be the answer they wanted. Anyone in the leave administration business knows that these extended periods of tolling can make disability claims tricky to administer. While restarting the clock on all deadlines might have been simpler, our reality is that the pandemic isn’t over yet, and employers and employees alike are still experiencing the same claims-related challenges they were a year ago.
Tolling calculation examples
In an earlier post, we provided a couple of examples of how the rule could impact the timing of filing an initial claim for disability benefits and filing an appeal of an adverse disability benefit determination. We’ve modified those examples here to demonstrate how the scenarios projected into 2021 play out in accordance with the updated guidance.
Scenario A: Individual A became disabled and potentially eligible for short-term disability benefits on March 1, 2021. The plan typically requires the employee to file a short-term disability claim within 30 days of becoming disabled (March 31, 2021). When is the employee’s last day to file a timely short-term disability claim? (For this scenario, we assume the Outbreak Period is still ongoing one year later.)
Answer: When determining the 30-day period within which Individual A must file a claim, the Outbreak Period should be disregarded, but because the period to be disregarded cannot exceed one year, the last day Individual A is eligible to file a short-term disability claim is one year after March 31, 2021, which is March 31, 2022.
Scenario B: Individual B received a notification of an adverse benefit determination from Individual B’s disability plan on February 26, 2021. The notification advised Individual B that there are 180 days within which to file an appeal. What is individual B’s appeal deadline? (For this scenario, we assume the Outbreak Period ends on November 30, 2021.)
Answer: When determining the 180-day period within which Individual B’s appeal must be filed, the Outbreak Period is disregarded. Therefore, Individual B’s last day to submit an appeal is 180 days after November 30, 2021, which is May 29, 2022.
What employers should do
Employers should continue to extend timeframes on an individualized basis for claimants applying for disability benefits or appealing adverse disability benefit determinations under an ERISA plan during the Outbreak Period (which ends 60 days after the announced end of the COVID-19 national emergency). In addition, ensure that claims and appeals procedures are updated to reflect current guidance.
Provided by TIG Advisors.
Information provided on this blog is intended for general educational use. It is not intended to provide legal advice. ReedGroup does not provide legal services. Consult an attorney for legal advice on this or any other topic.
