01 May COVID-19 FAQs for Participants and Beneficiaries

Posted at 18:44h in COVID-19, Employee Benefits by . .

Know Your Benefits HeaderThe following information comes from the Department of Labor (DOL). This information was last updated April 28, 2020.

The Department of Labor (Department) is issuing these Frequently Asked Questions (FAQs) to help employee benefit plan participants and beneficiaries, as well as plan sponsors, and employers, impacted by the COVID-19 outbreak understand their rights and responsibilities under Title I of the Employee Retirement Income Security Act of 1974 (ERISA). In addition to providing this general guidance, the Department has issued the following other COVID-19 notices:

• Department of Labor, Internal Revenue Service (IRS) and Treasury Department Joint Notice (Joint Notice). The Joint Notice extends certain time frames affecting a participant’s right to healthcare coverage, portability, and continuation of group health plan coverage under COBRA after employment ends. The Joint Notice also extends the time for plan participants to file or perfect benefit claims or appeals of denied claims. The Joint Notice is available at http://www.dol.gov/sites/dolgov/files/ebsa/temporary-postings/covid-19-finalrule.pdf.
• EBSA Disaster Relief Notice 2020-01. The Disaster Relief Notice extends the time for plan officials to furnish benefit statements, annual funding notices, and other notices and disclosures required by ERISA. EBSA Disaster Relief Notice 2020-01 is available at https://www.dol.gov/agencies/ebsa/employers-andadvisers/plan-administration-andcompliance/disaster-relief/ebsa-disaster-reliefnotice-2020-01.

Health Benefit Questions

Q1: If my place of employment temporarily closes because of the COVID-19 outbreak, am I still covered by my employer’s group health plan?

As long as the employer exists, continues to sponsor a health plan, and employs you, and you continue to meet your employer’s eligibility requirements, you would generally remain covered under your existing health plan, even if the employer’s physical location closes. For information on coverage through a particular group health plan, review the plan’s Summary Plan Description (a document often referred to as an SPD or insurance booklet that describes your health coverage). Contact the plan administrator and request a copy if you don’t have one. The plan administrator may be able to send you one by email or direct you to a website where the SPD is posted. Note that many plans require employee contributions, and those contributions are likely still due, even if you are not being paid and those contributions are no longer being automatically deducted from your wages or salary. If so, you may need to make this payment yourself.

Q2: My employer’s place of business is temporarily closed because of the COVID-19 outbreak. I cannot contact my plan administrator, or the claims administrator. Who do I contact to file a claim for benefits, or to obtain replacement identification documents?

Many employers affected by the COVID-19 outbreak may provide special ways for employees to contact them during the outbreak. Your employer should be able to give you the name of the person to contact to obtain claim forms or other documents. If you cannot locate a contact person for your employer, you may contact one of our benefits advisors for help at www.askebsa.dol.gov or 1-866-444-3272.

Health Care Reform: Grandfathered Plans

Q3: I think I may be losing my health coverage as a result of the COVID-19 outbreak. What can I do to obtain other health coverage?

You may have options. Read the guidance provided in the Joint Notice, which may allow you more time to preserve your rights under the special enrollment and COBRA provisions described below.

  • Special Enrollment in Another Group Health Plan – If other group health coverage is available (for example, if your spouse’s employer offers a group health plan for which you are eligible), you may consider requesting a special enrollment period to enroll in the other plan. A special enrollment period gives you (and your family) an opportunity to enroll in a plan for which you are otherwise eligible outside of the plan’s open enrollment period. To qualify, you must request enrollment, typically within 30 days of losing eligibility for other coverage. These deadlines are extended during the COVID-19 outbreak, as explained in Q4, below. See Joint Notice at http://www.dol.gov/sites/dolgov/files/ebsa/temporary-postings/covid-19- finalrule.pdf. After you request a special enrollment period and enroll in a plan, coverage must be made effective no later than the first day of the month following your request for enrollment. This type of coverage might be less expensive than other options because the employer often pays a part of the premium.
  • COBRA Continuation Coverage – If you are losing coverage through an employer that continues to offer a group health plan, you may want to consider electing COBRA continuation coverage.1 COBRA generally applies to employers with 20 or more employees and allows you (and your family) to continue the same group health coverage at group rates. 2 Your cost may be higher than what you were paying before if your employer is no longer paying a portion of your premium during the COBRA continuation coverage period. Your plan administrator should notify you about the availability of COBRA coverage. After getting this notice, you generally have 60 days to elect coverage and 45 days after electing coverage to make your first payment. Your COBRA coverage is then retroactive to the date that you otherwise would have lost coverage. These deadlines are extended during the COVID-19 outbreak, as explained in Q4, below. See Joint Notice at http://www.dol.gov/sites/dolgov/files/ebsa/temporary-postings/covid-19-final- rule.pdf. However, you can elect COBRA before you receive the election notice. (Note – If your special enrollment period after losing group health plan coverage has passed and you have elected COBRA, you won’t be eligible for special enrollment in another group health plan, such as a spouse’s plan, until you have a new special enrollment event, such as marriage, birth of a child, or if you exhaust all COBRA coverage available to you.) COBRA coverage typically lasts 18 months, but may last longer in certain circumstances. For more information on COBRA, you can review “An Employee’s Guide to Health Benefits under COBRA,” available at https://www.dol.gov/sites/dolgov/files/legacy-files/ebsa/about-ebsa/our-activities/resourcecenter/publications/an-employees-guide-to-health-benefits-under-cobra.pdf.
  • Special Enrollment in Individual Market Insurance Coverage – The Health Insurance Marketplace offers information and enrollment assistance for comprehensive individual health insurance coverage. Individuals may be eligible for a premium tax credit, which will lower monthly premiums, and cost-sharing reductions, which will lower out-of-pocket costs for deductibles, coinsurance, and copayments. Individuals who lose job-based health coverage qualify for a special enrollment period to enroll in a Marketplace plan outside of the annual open and may select a plan within 60 days of losing job-based coverage (either 60 days before or 60 days after). The date coverage starts depends on when you lose coverage and the date a plan is selected. When applying, you may be asked to provide proof of your recent or upcoming loss of coverage. Information on Marketplace coverage is available at HealthCare.gov or by calling 1-800-318-2596 (TTY 1-855- 889- 4325). Individuals who do not reside in a state that uses the HealthCare.gov platform can learn more about their state’s Marketplace here: https://www.healthcare.gov/marketplace-in-your-state/.
  • Health Coverage through a Government Program – At HealthCare.gov, individuals also can find out if they qualify for free or low-cost coverage through Medicaid or the Children’s Health Insurance Program (CHIP). Medicaid is a federal/state health program administered by the state for low income families and children, pregnant women, the elderly, people with disabilities, and in some states, other childless adults. CHIP is a federal/state partnership that provides children in families that earn too much money to qualify for Medicaid with health coverage. In some states, CHIP also covers pregnant women. You can get information on Medicaid through your state Medicaid office or by visiting https://www.medicaid.gov. To learn more about the CHIP program in your state, visit insurekidsnow.gov

 

Note: When considering your health coverage options, you should examine the scope of the coverage (including benefit coverage and limitations), premiums, cost-sharing (including copayments and deductibles), and any applicable waiting periods for coverage. You may also want to contact your current health care providers and the health plan(s) you’re interested in to make sure that your providers are included in your new plan’s network. For information on the coverage through a particular group health plan, you should review the plan’s Summary Plan Description (SPD). Contact the plan administrator and request a copy if you don’t have one. For more information on obtaining other health coverage, you can review “Retirement and Health Care Coverage…Questions and Answers for Dislocated Workers,” available at https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resourcecenter/publications/questions-and-answers-for-dislocated- workers.pdf.

Q4: To preserve my right to receive group health coverage under certain health care coverage provisions, like COBRA and special enrollment periods, I have to provide documentation and notices to my plan within a certain timeframe. Are any of these timeframes being extended?

Yes. The Joint Notice mentioned on page 1 provides extra time for participants and beneficiaries of group health plans to meet certain deadlines affecting COBRA continuation coverage, special enrollment, filing claims for benefits, appeals of denied claims, and external review of certain claims. For disability, retirement and other plans, participants and beneficiaries have extra time to make claims for benefits and appeal denied claims. Plans, plan administrators, and employers have extra time to provide certain COBRA notices. Read the Joint Notice in full at: http://www.dol.gov/sites/dolgov/files/ebsa/temporary-postings/covid-19-final-rule.pdf.
Q5: I’m enrolled in my spouse’s employer plan and my spouse died of COVID-19. My spouse’s employer has agreed to pay my health coverage premiums for a specified period of time (12 months). What effect will that have on my future eligibility for continuation health coverage under COBRA?

You should ask the employer for more information.

  • If the employer is…Making this offer of paid coverage only if COBRA coverage is declined…Then, when this coverage ends you will be ineligible for COBRA coverage, which is more expensive but lasts longer.
  • If the employer is…Paying the first 12 months of COBRA coverage…Then, when this coverage ends you can continue coverage at your own expense for up to 24 additional months, or enroll on the Marketplace after the employer stops contributing through a special enrollment period.
  • If the employer is…Delaying your loss of coverage…Then, when this coverage ends you will be able to have COBRA coverage at your own expense for up to 36 additional months.

You may be able to get coverage that is more affordable than COBRA coverage through the Health Insurance Marketplace, which provides special enrollment periods for certain qualifying events, including loss of qualifying health coverage due to the death of a family member or when an employer stops contributing to a temporary continuation of your coverage (such as COBRA). For more information, visit https://www.healthcare.gov/coverage-outside-openenrollment/special-enrollment-period/.

Q6: Can my employer terminate or reduce my health benefits at any time?

Employers offer health benefits on a voluntary basis. Federal law does not require employers to offer health coverage to their employees, nor does it generally prevent employers from cutting or reducing benefits. However, employers may have to take certain steps (such as providing advance notice) before reducing health benefits.3 If an employer terminates your health benefits, depending on the reason for termination, you and your family may have a right to continuation coverage under COBRA, if the plan still exists or a related employer still has a plan. You may also have a contractual right to coverage if, for example, benefits are required under a collective bargaining agreement. In addition, a plan cannot deny eligibility or continued eligibility based on an individual’s health status.

Depending on your coverage, the law may restrict the plan or health insurer from making midyear changes. In response to the COVID-19 outbreak, plans otherwise restricted from making mid-year changes may add telehealth and other remote health services, in addition to services related to diagnosis and treatment of COVID-19, mid- year and without providing 60 days’ advance notice as required under federal law.

Such plans may not limit or eliminate other benefits or increase cost-sharing, to offset the costs of those services and must provide notice of the changes as soon as reasonably practicable. See Families First Coronavirus Response Act FAQs Part 42, Q9 and Q13 at https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/ouractivities/resource-center/faqs/aca-part-42.pdf (setting forth non-enforcement policies for certain expansions in coverage in response to the COVID-19 outbreak).

For information on the Affordable Care Act and how it relates to employers offering health coverage, visit https://www.cms.gov/CCIIO/Programs-and-Initiatives/Employer-Initiatives/EmployerInitiatives.

Q7: I am a retiree and I receive retiree health benefits from my former employer. The company was affected by the COVID-19 outbreak. Can my retiree health benefits be terminated or changed?

Employees and retirees should know that private sector employers are not required by law to promise retiree health benefits. When employers do offer retiree health benefits, nothing in federal law prevents them from cutting or eliminating those benefits unless they have made a specific legally binding promise to maintain the benefits. The key to understanding your retiree health benefits lies in the documents governing your plan. If you have not already done so, you should obtain a copy of the Summary Plan Description (SPD) to determine the nature of the employer’s promise to you. If you do lose your retiree benefits, you may qualify for a special enrollment period to enroll in other coverage, discussed more above.

Q8: My employer did not pay the insurance premium for my group coverage. May I pay the premium to continue my coverage?

You should contact your employer to determine whether the employer intends to pay the premium. You may also wish to contact your state insurance commissioner regarding any rights you may have under state law to pay premiums directly to the insurance company or convert your health coverage to an individual policy. If your premiums are in arrears or your coverage has been cancelled as a result of the employer’s failure to make the premium payment, you may contact one of our benefits advisors at www.askebsa.dol.gov or 1-866-444-3272.

Q9: I had COBRA coverage before the COVID-19 outbreak. The location I was sending my COBRA premium to is closed. Where do I send my premium?

Contact your employer for the information needed to continue making your COBRA premium payments. If you can’t contact your employer, you may contact one of our benefits advisors at www.askebsa.dol.gov or 1-866-444-3272.

Q10: Why is focusing on health coverage right away important when I lose eligibility for my employer’s plan?

Don’t wait too long to make a health coverage decision. Several of your best choices are only available for a limited time. Generally, you must request special enrollment in your spouse’s employer’s plan within 30 days of losing eligibility for other health coverage, and you must elect COBRA continuation coverage within 60 days of receiving the COBRA election notice. Even though the Department has extended those timeframes in the Joint Notice, you should be aware of the limited time available to exercise your healthcare coverage options. Additionally, you must apply for special enrollment in an individual health plan within 60 days of losing employer sponsored coverage, and that timeframe has not been extended

Q11: Where can I get more information on my health coverage options?

If you still have questions about your rights or need help getting benefits, you may contact one of our benefits advisors at www.askebsa.dol.gov or 1-866-444-3272.

Q12. I was laid off because of the COVID- 19 outbreak and filed for unemployment benefits. I received $600 per week of Federal Pandemic Unemployment Compensation in addition to my normal unemployment compensation. Can I use this money to pay my COBRA or other healthcare premiums?

Yes. As part of the recent COVID-19 legislation, Congress provided for an additional $600 per week of unemployment compensation (Federal Pandemic Unemployment Compensation) for states that enter into an agreement with the federal government. Federal Pandemic Unemployment Compensation ends on July 31, 2020. While the law does not require you to use this additional money to pay your health care premiums, maintaining your health care coverage is one of the most important things you can do in a pandemic.

Retirement Benefit Questions

Q13: My employer’s place of business is temporarily closed due to the COVID-19 outbreak. Who should I contact to file a claim for retirement benefits or make sure that I will continue to receive my pension payments on time?

First, contact your plan administrator (that could be your employer or the labor organization sponsoring the plan, or someone they’ve appointed to administer the plan). If you don’t know who the administrator is, check your plan’s Summary Plan Description (SPD), which should explain how to identify and locate the plan administrator, and how to apply for a benefit. You could also contact your employer’s human resource or personnel department. If that’s not possible, you could reach out to the plan trustee who holds the plan assets, a mutual fund, insurance company, bank or other financial institution providing services to the plan, a third party who handles the administrative functions of the plan, or the plan accountant (they may be identified in previous correspondence or benefit statements). If none of those options work, you may contact one of our benefits advisors at www.askebsa.dol.gov or 1-866-444-3272.

Q14: My pension payment normally arrives on a particular day each month. It did not come this month. What should I do?

Contact your plan administrator. Ask whether the plan is having operational problems or whether this problem is limited to your payment. If the problem is limited to your payment, discuss how to resolve your problem. If the delay involves a plan operation issue, ask what efforts are being made to make timely payments. Your employer or former employer may be able to get answers to your questions.

Companies related to your employer, for example a parent or subsidiary, also may be able to help you get information on the status of payments. You could also contact your plan’s third-party administrators, investment advisors, and trustees. If you still can’t get information about the status of your benefits, you may contact one of our benefits advisors at www.askebsa.dol.gov or 1-866-444-3272.

Q15: How can I make changes in the way my 401(k) plan account is invested if the plan official or service provider responsible for implementing my investment decision is adversely affected by the COVID-19 outbreak?

First, follow normal procedures described in your Summary Plan Description or other plan documents. If your employer or the financial services firm holding your account was affected by the COVID-19 outbreak, there may be a delay in processing your directions to change or reallocate your investments. If so, you should contact the plan administrator or other plan officials, such as the employer sponsoring the plan, trustee, or the party providing administrative services to the plan to learn what’s being done to restore the plan’s normal operations. If you cannot obtain this information, you may contact one of our benefits advisors at www.askebsa.dol.gov or 1-866-444-3272.

Q16: Can I get money out of my retirement plan if I need financial assistance now?

You can only borrow or withdraw funds if your plan allows it – and you should carefully consider the financial consequences before doing so.

Your Summary Plan Description (SPD) or other plan documents should explain if your plan allows loans or withdrawals in the event of hardship or disability.

In addition, under recently enacted COVID- 19 legislation, you may be able to take advantage of temporary liberalized plan loan and distribution rules if you or certain members of your family are adversely affected by the COVID-19 outbreak. For additional information, go to www.IRS.gov/coronavirus or call the IRS at 1-877-829-5500.

Withdrawing money from your plan may have tax or other adverse consequences. (See Q17.) If you wish to take money out of your retirement plan in the form of a loan or a hardship withdrawal, you should contact your plan administrator, plan sponsor, or other plan official. If you can’t contact any of these officials, you may contact one of our benefits advisors at www.askebsa.dol.gov or 1-866-444-3272.

Q17: Are there any downsides to receiving a pre-retirement distribution of my retirement benefits?

Yes. Because a pre-retirement distribution may be considered “income,” it could affect your eligibility to receive unemployment compensation. Each state sets its own unemployment insurance benefits eligibility guidelines; therefore, you should review your state’s latest updates on Unemployment Insurance changes related to COVID-19 before you act. If you are ineligible for unemployment compensation, a pre-retirement distribution of retirement benefits may be useful during these difficult times.

Receiving money from your retirement plan may result in more income tax. You can defer these taxes, however, if you keep the money in your plan or if you “roll over” any amounts that are eligible for rollover into a qualified retirement plan or Individual Retirement Account (IRA). Rules under the Internal Revenue Code generally govern rollovers. For additional information, see https://www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-planand-ira-distributions. If you cash out your 401(k) or other employer-sponsored retirement plan when leaving a job and you are younger than 59½ years old, you may have to pay a 10% additional federal income tax, along with other state and federal taxes.

Under recently enacted COVID-19 legislation, special temporary rules may apply for “coronavirus-related distributions” of $100,000 or less made in 2020. For additional information go to www.IRS.gov/coronavirus or call the IRS at 1-877-829-5500.

During difficult economic times, you may look at your 401(k) plan balance and think that you need the money now more than you will later. And of course, there may be times when it will be necessary as a last resort to turn to a loan or hardship withdrawal. But withdrawing money early may result in a permanent reduction of your retirement savings. So, before you act, make sure you understand the differences between loans, hardship withdrawals, rollovers, and lump sum cash outs, including the long-term consequences of each.

Q18: When must my retirement plan pay my claim for benefits?

A plan may take a reasonable amount of time to review a benefits claim before making a payment. Plan administrators must act prudently and follow the procedures in the plan documents. Your Summary Plan Description (SPD) or other plan documents should provide information on those procedures. If you have specific questions, you should contact the plan administrator. Some plans pay benefits only after a participant reaches the normal retirement age specified in the plan and terminates employment. Many plans, however, allow for earlier distribution of benefits under certain circumstances. For example, some plans may require a participant to be separated from employment for a specified period of time or reach a specified age before being eligible to receive a benefit.

Q19: Is my retirement plan required to give me a lump-sum distribution?

No. Federal law does not require plans to offer lump-sum distributions, although many do. Defined contribution plans (such as 401(k) plans) are more likely to offer a lump sum than traditional defined benefit pension plans. Read your Summary Plan Description (SPD) and other plan documents to see if your plan offers lump sum distributions and for any spousal consent requirements.

Q20: I am the spouse of a deceased plan participant. How do I know what benefits I am entitled to; how do I file a claim; and what proof will I need to give the plan?

One of the most important documents you should have is the plan’s Summary Plan Description (SPD). It outlines the plan rules including benefit rights, the way benefits are calculated, how to apply for benefits, and how to appeal a denial of a claim for benefits. Your plan administrator must provide you with a copy of the SPD if you request it in writing. Under EBSA Disaster Relief Notice 2020-01, a delay in responding to your request during the outbreak period (March 1, 2020 through the 60th day following the end of the National Emergency declared by President Trump on March 13, 2020) will not violate federal law if the plan administrator acts in good faith and furnishes the SPD as soon as administratively practicable under the circumstances. EBSA Disaster Relief Notice 2020-01 is available at https://www.dol.gov/agencies/ebsa/employers-andadvisers/plan-administration-and-compliance/disaster-relief/ebsa-disaster-reliefnotice-2020-01.

You can also ask the plan administrator about the amount of benefits your spouse had earned to date and vesting status (the amount of benefits earned that cannot be forfeited). This is important to know, whether you withdraw your money now or later.

You should also ask the plan administrator what information the plan requires to decide your claim and how to file the claim.

Q21: If my employer faces economic difficulties due to the COVID-19 outbreak, can my employer terminate my retirement plan, and if so, what happens to my benefits?

Plan termination depends on the type of retirement plan. The benefits you are entitled to will depend on the type of plan.

If you were covered by a defined benefit pension plan, such as a traditional pension plan or a cash balance pension plan, your employer may terminate the plan if it has sufficient assets to pay all plan benefits or if your employer meets specific criteria in the law showing that it cannot afford to continue the plan. Check your plan documents and Summary Plan Description (SPD) to see what benefits you’re entitled to. The plan’s formula may include factors such as age, length of service, and pay.

You may need to reach a specific age (generally 65 – the plan documents and SPD should specify) before you can receive your benefits. The Pension Benefit Guaranty Corporation (PBGC) guarantees vested benefits in most private-sector defined benefit pension plans, subject to limits in the law. For information on PBGC’s plan termination insurance program and PBGC guarantees, see PBGC’s Pension Plan Termination Fact Sheet on PBGC.gov.

If you were covered by a defined contribution plan, such as a 401(k) plan, profit sharing plan, or employee stock ownership plan, you are always 100% vested in the portion of your account attributable to the contributions you made to the plan, along with any investment gains and earnings on your contributions, less any investment losses. In addition, depending on the terms of the plan, you may be vested in part or all of the employer contributions allocated to your account along with investment gains and earnings thereon, less any investment loss. You will automatically vest in 100% of your account when the plan is terminated.

Q22: I haven’t received a benefit statement from my 401(k) plan. When can I expect to receive it?

If plan officials are responsible for investing your account, the plan must provide you an annual benefit statement. If you did not receive your 2019 benefit statement by February 14, 2020, you should contact your plan administrator. The plan administrator does not have to provide you an annual benefit statement for 2020 until February 14, 2021.

If you are responsible for directing how your account is invested, the plan must provide you quarterly benefit statements. If you did not receive a benefit statement for the fourth quarter (October 1 through December 31) of 2019 by February 14, 2020, you should contact your plan administrator.

The COVID-19 outbreak may delay the preparation and delivery of 401(k) and other defined contribution plan quarterly benefit statements due after March 1, 2020. Under EBSA Disaster Relief Notice 2020-01, a delay in furnishing a benefit statement during the outbreak period (March 1, 2020 through the 60th day following the end of the National Emergency declared by President Trump on March 13, 2020) will not violate Federal law if the plan administrator acts in good faith and furnishes your benefit statement as soon as administratively practicable under the circumstances.

Q23: Where can I get more information on my retirement benefit rights?

  • Retirement and Health Care Coverage – Questions and Answers for Dislocated Workers [en español]
  • What You Should Know About Your Retirement Plan [en español]
  • EBSA Disaster Relief Notice 2020-01
  • Example 7 of Joint Notice – Extension of Certain Time Frames for Employee Benefit Plans Affected by the COVID-19 outbreak

If you still have questions about your rights, want to request copies of publications, or need assistance in obtaining your benefits, you may contact one of our benefits advisors electronically at www.askebsa.dol.gov or by calling 1-866-444-3272.

This Know Your Benefits article is provided by Reseco Insurance Advisors and is to be used for informational purposes only and is not intended to replace the advice of an insurance professional. Visit us at www.resecoadvisors.com. © 2020 Zywave, Inc. All rights reserved.
1 If you are Medicare-eligible, but have not enrolled in Medicare, and choose to enroll in COBRA, you may incur unexpected out-of-pocket costs for benefits paid under COBRA, as well as penalties for late enrollment in Medicare once you enroll. For more information on Medicare visit: https://www.medicare.gov/medicare-and-you.
2 Many states have laws similar to COBRA, including those that apply to health insurers i-COBRA). Check with r’s office to see if such coverage is available to you.

 

3 Individuals that experience a significant reduction in health benefits may also qualify for a special enrollment period to enroll in Marketplace coverage. See www.healthcare.gov for more information.

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