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EBSA Provides Clarification and Sows Confusion with Outbreak Period Guidance

By: Andrew Silverio, Esq.

On Friday, February 26, the EBSA released its Disaster Relief Notice 2021-01 (available at https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/disaster-relief/ebsa-disaster-relief-notice-2021-01), addressing a conflict that many commentators had already picked up on – the fact that previous relief (see https://www.federalregister.gov/documents/2020/05/04/2020-09399/extension-of-certain-timeframes-for-employee-benefit-plans-participants-and-beneficiaries-affected#footnote-2-p26352) provided for the tolling of various timelines under health plans during the “outbreak period”, which is now over a year old and still ongoing, but the authority on which that relief relies expressly limits any such tolling to one year.  Because of this conflict, many commentators had concluded that this must mean that the “outbreak period” ends as of February 28, 2021, making it one full year in length.  However, the EBSA has clarified that this is not the case – they have interpreted the one-year limitation as applicable to each individual event tolled as opposed to the tolling relief/outbreak period itself.  Essentially, they explain that the duration of any tolling granted under the rule can be no longer than one year.  This means that an event with an original due date of March 1, 2020 will now have a due date of March 1, 2021.

However, the examples chosen by the EBSA to illustrate this interpretation have given rise to some significant confusion, because the relief can end either by hitting that one-year mark, or as originally intended through the end of the actual outbreak period (whenever that occurs).  In the example given above, we have already tolled one full year, so there is no ambiguity.  However, in the second example given, the EBSA states “Similarly, if a qualified beneficiary would have been required to make a COBRA election by March 1, 2021, the Joint Notice delays that election requirement until the earlier of 1 year from that date (i.e., March 1, 2022) or the end of the Outbreak Period.”  In choosing an initial due date which is well within the outbreak period and not addressing the fact that all days leading up to that event have already been expended, the EBSA has led many readers to interpret this as meaning that after one year of tolling, or when the outbreak period ends, whichever is first, all tolled events come to maturity immediately.  This is an incorrect interpretation – any un-used days at the time tolling begins would still be owed to an individual at the time tolling ends, whether that occurs after one year or because the outbreak period comes to an end.  So, for example, if an individual was on day 15 of a 60-day COBRA election window when tolling began on March 1, 2020, that individual would now be considered to be on day 16 of that window on March 1, 2021.  In other words, the election would resume tolling rather than becoming immediately due on March 1, 2021.

The case-by-case approach that the EBSA has interpreted to be applicable here will certainly give rise to unique administrative challenges.  However, these challenges should pale in comparison to the chaos that would have ensured if all relief had been interpreted to come to an end on March 1, 2021, as some had predicted.