Risk & Compliance

Agencies Extend Deadlines after Katrina

The relief provides extra time to comply with certain deadlines concerning COBRA, HIPAA, and Form 5500.
Stephen TaubSeptember 26, 2005

Federal agencies continue to be flexible with companies and their workers when enforcing rules and regulations in the areas hardest hit by Hurricane Katrina.

In a joint notice, the Internal Revenue Service and the Employee Benefits Security Administration (EBSA) of the Department of Labor announced relief for plan participants, beneficiaries, and other claimants who lived or worked in the parts of Alabama, Louisiana and Mississippi designated federal disaster areas on account of Katrina.

In a report to clients, law firm McGuire Woods pointed out that individual workers, as well as group health plans, disability and other welfare plans, pension plans, and health insurance issuers subject to ERISA must disregard the period from August 29 through January 3, 2006, when determining certain key time periods and dates. They include:

• The 63-day break-in-coverage period under the Health Insurance Portability and Accountability Act (HIPAA), in connection with determining creditable coverage;
• The 30-day period to secure creditable coverage without a preexisting condition exclusion for certain children under HIPAA;
• The 30-day period to request special enrollment under HIPAA;
• The 60-day period to elect health-care continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA);
• The date for making COBRA premium payments;
• The date for individuals to notify the plan of a qualifying event or determination of disability under COBRA;
• The date within which individuals may file a benefit claim under the plan’s ERISA claims procedure;
• The date within which claimants may file an appeal of an adverse benefit determination under the plan’s ERISA claims procedure.

The EBSA also announced that some companies required to file Form 5500, the Annual Return/Report of Employee Benefit Plan, between August 29 and January 3, 2006, now have until January 3. The extension applies to plan administrators, employers, and other entities located in the relevant disaster areas. It also applies to companies located outside those areas that were indirectly affected because they were unable to obtain necessary information from service providers, banks, and insurance companies whose operations were directly impacted by Katrina.

In addition, the IRS liberalized procedures for making plan loans and hardship distributions to employees or former employees whose principal residence on August 29 was located in the disaster areas.

Other rules were relaxed related to the remittance of plan contributions and loan repayments, certain Pension Benefit Guarantee Corp. deadlines, and special tax treatments for “Qualified Hurricane Katrina Distributions.”