Extension of Certain Time Frames for Employee Benefit Plans
Affected by Hurricane Katrina
[09/21/2005]
Volume 70, Number 182, Page 55499-55502
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Part V
Department of Labor
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Employee Benefits Security Administration
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29 CFR Parts 2560 and 2590
Department of the Treasury
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Internal Revenue Service
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26 CFR Part 54
Extension of Certain Time Frames for Employee Benefit Plans Affected by
Hurricane Katrina; Final Rule
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Parts 2560 and 2590
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
Extension of Certain Time Frames for Employee Benefit Plans
Affected by Hurricane Katrina
AGENCIES: Employee Benefits Security Administration, Department of
Labor; Internal Revenue Service, Department of the Treasury.
ACTION: Extension of time frames.
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SUMMARY: This document announces the extension of certain time frames
under the Employee Retirement Income Security Act and Internal Revenue
Code for group health plans, disability and other welfare plans,
pension plans, participants and beneficiaries of these plans, and group
health insurance issuers directly affected by Hurricane Katrina.
EFFECTIVE DATES: September 21, 2005.
FOR FURTHER INFORMATION CONTACT: Amy Turner, Employee Benefits Security
Administration, Department of Labor, at 202-693-8335; or Russ
Weinheimer, Internal Revenue Service, Department of the Treasury, at
202-622-6080.
SUPPLEMENTARY INFORMATION:
I. Purpose
As a result of Hurricane Katrina, a number of participants and
beneficiaries covered by group health plans, disability or other
welfare plans, and pension plans may encounter problems in exercising
their health coverage portability or continuation coverage rights, or
in filing or perfecting their benefit claims. Recognizing the numerous
challenges already facing affected participants and beneficiaries, it
is important that plans and the Agencies take steps to minimize the
possibility of individuals losing benefits because of a failure to
comply with certain pre-established time frames. Similarly, the
Agencies recognize that affected plans also may have difficulty in
complying with certain notice obligations related to a participant's
health coverage portability or continuation coverage rights.
Accordingly, under the authority of section 518 of the Employee
Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1148, and
section 7508A of the Internal Revenue Code of 1986 (Code), 26 U.S.C.
7508A, the Agencies are extending certain time frames otherwise
applicable to group health plans, disability and other welfare plans,
pension plans, their participants and beneficiaries, and group health
insurance issuers, under ERISA and the Code.\1\
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\1\ ERISA section 518 and Code section 7508A generally provide
that, in the case of an employee benefit plan, sponsor,
administrator, participant, beneficiary, or other person with
respect to such a plan, affected by a Presidentially declared
disaster, notwithstanding any other provision of law, the
Secretaries of Labor and the Treasury may prescribe (by notice or
otherwise) a period of up to one year that may be disregarded in
determining the date by which any action is required or permitted to
be completed. Section 518 of ERISA and section 7508A of the Code
further provide that no plan shall be treated as failing to be
operated in accordance with the terms of the plan solely as a result
of complying with the postponement of a deadline under those
sections.
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The Agencies believe that such relief is immediately needed to
preserve and protect the benefits of participants and beneficiaries in
affected plans. Accordingly, the Agencies have determined, pursuant to
section 553 of the Administrative Procedure Act, 5 U.S.C. 553(b) and
(d), that there is good cause for making the relief provided by this
notice effective immediately upon publication and that notice and
public participation may result in undue delay and, therefore, be
contrary to public interest.
The relief provided by this Notice supplements other Hurricane
Katrina disaster relief, which can be accessed on the Internet at
http://www.dol.gov and http://www.irs.gov.
II. Background
Title I of the Health Insurance Portability and Accountability Act
of 1996 (HIPAA) provides portability of group health coverage by, among
other things, placing limitations on the ability of a group health plan
or group health insurance issuer to impose a preexisting condition
exclusion and by requiring special enrollment rights. ERISA section 701
and Code section 9801. Title X of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA) permits qualified beneficiaries who
lose coverage under a group health plan to elect continuation health
coverage. ERISA section 601 and Code section 4980B. Section 503 of
ERISA and the Department of Labor's claims procedure regulation at 29
CFR 2560.503-1 require employee benefit plans subject to Title I of
ERISA to establish and maintain reasonable procedures governing the
determination and appeal of claims for benefits under the plan. All of
the foregoing provisions include timing requirements for certain acts
in connection with employee benefit plans, some of which are being
modified by this notice.
A. HIPAA Time Frames
The HIPAA portability provisions generally provide that a group
health plan or group health insurance issuer may disregard a period of
creditable coverage if there is a subsequent 63-day break in coverage.
ERISA section 701(c)(2)(A) and Code section 9801(c)(2)(A). Also, a
newborn, adopted child, or child placed for adoption may not be subject
to a preexisting condition exclusion period if covered under creditable
coverage within 30 days of birth, adoption, or placement for adoption.
ERISA section 701(d) and Code section 9801(d).
The HIPAA special enrollment provisions generally provide that
employees must request enrollment within 30 days of a special
enrollment trigger (including loss of eligibility of coverage or loss
of employer contributions) to be eligible for special enrollment. ERISA
section 701(f) and Code section 9801(f).
The HIPAA certification rules prescribe time periods for the
provision of certificates of creditable coverage upon loss of coverage.
Under the regulations, plans and issuers subject to the COBRA
continuation coverage provisions are required to provide an automatic
certificate no later than the time for providing a COBRA election
notice. Plans and issuers not subject to COBRA are required to provide
the automatic certificate within a reasonable time after coverage
ceases. 29 CFR 2590.701-5(a)(2)(ii) and 26 CFR 54.9801-5(a)(2)(ii).
B. COBRA Time Frames
The COBRA continuation coverage provisions generally provide a
qualified beneficiary a period of at least 60 days to elect COBRA
continuation coverage under a group health plan. ERISA section 605 and
Code section 4980B(f)(5).
Plans are required to allow payers to pay premiums in monthly
installments and plans cannot require payment of premiums before 45
days after the day of the initial COBRA election. ERISA section 602(3)
and Code section 4980B(f)(2)(C). Under the COBRA rules, a premium is
considered paid timely if it is made not later than 30 days after the
first day in the period for which payment is being made. ERISA section
602(2)(C) and Code section 4980B(f)(2)(B)(iii), 26 CFR 54.4980B-8 Q&A-
5(a).
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Notice provisions prescribe time periods for individuals to notify
the plan of a qualifying event or determination of disability and for
plans to notify qualified beneficiaries of their rights to elect COBRA
continuation coverage. ERISA section 606 and Code section 4980B(f)(6),
29 CFR 2590.606-3.
C. Claims Procedure Time Frames
Section 503 of ERISA and the Department of Labor's claims procedure
regulation at 29 CFR 2560.503-1 require employee benefit plans to
establish and maintain a procedure governing the filing and initial
disposition of benefit claims, and provide claimants with a reasonable
opportunity to appeal an adverse benefit determination to an
appropriate named fiduciary. Under the regulation, plans cannot have
provisions that unduly inhibit or hamper the initiation or processing
of claims for benefits. Further, group health plans and disability
plans must provide claimants at least 180 days following receipt of an
adverse benefit determination to appeal (60 days in the case of pension
plans and other welfare benefit plans).
III. Relief
A. Relief for Affected Plan Participants, Beneficiaries, Qualified
Beneficiaries, and Claimants
With respect to plan participants, beneficiaries, qualified
beneficiaries, or claimants directly affected by Hurricane Katrina (as
defined in paragraph III.C.(1)), group health plans, disability and
other welfare plans, pension plans, and health insurance issuers
subject to part 7 of ERISA, must disregard the period from August 29,
2005 through January 3, 2006 when determining any of the following time
periods and dates--
(1) The 63-day break in coverage period under ERISA section
701(c)(2)(A) and Code section 9801(c)(2)(A),
(2) The 30-day period to secure creditable coverage without a
preexisting condition exclusion for certain children under ERISA
section 701(d) and Code section 9801(d),
(3) The 30-day period to request special enrollment under ERISA
section 701(f) and Code section 9801(f),
(4) The 60-day period to elect COBRA continuation coverage under
ERISA section 605 and Code section 4980B(f)(5),
(5) The date for making COBRA premium payments pursuant to ERISA
section 602(2)(C) and (3) and Code section 4980B(f)(2)(B)(iii) and (C),
(6) The date for individuals to notify the plan of a qualifying
event or determination of disability under ERISA section 606(a)(3) and
Code section 4980B(f)(6),
(7) The date within which individuals may file a benefit claim
under the plan's claims procedure pursuant to 29 CFR 2560.503-1, and
(8) The date within which claimants may file an appeal of an
adverse benefit determination under the plan's claims procedure
pursuant to 29 CFR 2560.503-1(h).
B. Relief for Group Health Plans
With respect to group health plans, their sponsors and
administrators, and health insurance issuers subject to part 7 of
ERISA, that are directly affected by Hurricane Katrina (as defined in
paragraph III.C.(3)), the period from August 29, 2005 through January
3, 2006 shall be disregarded when determining the following dates--
(1) The date for providing an automatic certificate of creditable
coverage under 29 CFR 2590.701-5(a)(2)(ii) and 26 CFR 54.9801-
5(a)(2)(ii), and
(2) The date for providing a COBRA election notice under ERISA
section 606 and Code section Code section 4980B(f)(6).
C. Definitions
For purposes of this notice--
(1) A participant, beneficiary, qualified beneficiary, or claimant
directly affected by Hurricane Katrina means an individual who resided,
lived, or worked in one of the disaster areas (as defined in paragraph
III.C.(2)) at the time of the hurricane; or if the employee benefit
plan providing the individual's coverage was directly affected (as
defined in paragraph III.C.(3)).
(2) The term disaster areas means the counties and parishes in
Louisiana, Mississippi or Alabama that have been or are later
designated as disaster areas eligible for Individual Assistance by the
Federal Emergency Management Agency because of the devastation caused
by Hurricane Katrina.
(3) An employee benefit plan is directly affected by Hurricane
Katrina if the principal place of business of the employer that
maintains the plan (in the case of a single-employer plan, determined
disregarding the rules of section 414(b) and (c) of the Code); the
principal place of business of employers that employ more than 50
percent of the active participants covered by the plan (in the case of
a plan covering employees of more than one employer, determined
disregarding the rules of section 414(b) and (c) of the Code); the
office of the plan or the plan administrator; or the office of the
primary recordkeeper serving the plan, was located in one of disaster
areas (as defined in paragraph III.C.(2)) at the time of the hurricane.
D. Any later extension of the January 3, 2006 date by the Agencies
will automatically apply for purposes of the deadlines addressed by
this notice.
IV. Examples
The following examples illustrate the time frame for extensions
required by this notice. In each example, assume that the individual
described is directly affected by the hurricane.
Example 1. (i) Facts. Individual A works for Employer X and
participates in X's group health plan. On August 29, 2005, the day
of Hurricane Katrina, X's business is destroyed and the plan ceases
to function. A has no other creditable coverage.
(ii) Conclusion. In this Example 1, when determining A's 63-day
break in coverage period and special enrollment period, the period
from August 29, 2005 through January 3, 2006 is disregarded.
Accordingly, A would not incur a 63-day break in coverage until 63
days after January 3 (which is March 7, 2006) and the last day of
any special enrollment period is 30 days after January 3 (which is
February 2, 2006).
Example 2. (i) Facts. Same facts as Example 1 and another
employer that is part of the same controlled group as X continues to
operate and sponsor a group health plan. A is provided a COBRA
election notice on October 2, 2005.
(ii) Conclusion. In this Example 2, the period from October 2,
2005 through January 3, 2006 is disregarded for purposes of
determining A's COBRA election period. The last day of A's COBRA
election period is 60 days after January 3, 2006 (which is March 4,
2006).
Example 3. (i) Facts. Individual B participated in a group
health plan and lost eligibility for coverage on August 14, 2005.
(ii) Conclusion. In this Example 3, B had been without coverage
for 14 days before the day of the hurricane. When determining B's
63-day break in coverage period and special enrollment period, the
period from August 29, 2005 through January 3, 2006 is disregarded.
The last day of B's 63-day break in coverage period is 49 days after
January 3 (which is February 21, 2006) and the last day of any
special enrollment period is 16 days after January 3, 2006 (which is
January 19, 2006).
Example 4. (i) Facts. Before the hurricane, Individual C was
receiving COBRA continuation coverage under a group health plan.
More than 45 days had passed since C had elected COBRA. Monthly
premium payments were due by the first of the month. The plan does
not permit qualified beneficiaries longer than the statutory 30-day
grace period for making premium payments. C made a timely August
payment, but not a September payment, before the hurricane.
(ii) Conclusion. In this Example 4, the period from August 29,
2005 through January 3, 2006 is disregarded for purposes of making
monthly COBRA premium installment
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payments. Premium payments made by 30 days after January 3, 2006
(which is February 2, 2006) for September, October, November,
December and January are timely.
Example 5. (i) Facts. Same facts as Example 4. By February 2,
2006, a payment equal to two months' premium has been made for C.
(ii) Conclusion. C is entitled to COBRA continuation coverage
for September and October 2005.
Example 6. (i) Facts. Individual D is a participant in a group
health plan. On October 1, 2004, D received medical treatment for a
condition covered under the plan, but a claim relating to the
medical treatment was not yet submitted. Under the plan, claims must
be submitted within 365 days of the participant's receipt of the
medical treatment.
(ii) Conclusion. For purposes of determining the 365-day period
applicable to D's claim, the period from August 29, 2005 through
January 3, 2006 is disregarded. Therefore, D's last day to submit a
claim is 34 days after January 3, 2006, which is February 6, 2006.
Example 7. (i) Facts. Individual E received a notification of an
adverse benefit determination from his disability plan on August 10,
2005. The notification advised E that there are 180 days within
which to file an appeal.
(ii) Conclusion. When determining the 180-day period within
which P's appeal must be filed, the period from August 29, 2005
through January 3, 2006 is disregarded. Therefore, E's last day to
submit an appeal is 162 days after January 3, which is June 14,
2006.
Signed at Washington, DC, this 16th day of September, 2005.
Ann Combs,
Assistant Secretary, Employee Benefits Security Administration,
Department of Labor.
Signed this 16th day of September, 2005.
Mark E. Matthews,
Deputy Commissioner for Services and Enforcement, Internal Revenue
Service, Department of the Treasury.
[FR Doc. 05-18901 Filed 9-19-05; 9:53 am]
BILLING CODE 4510-29-P
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