55500 Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Rules and Regulations 

1ERISA 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. 

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. 

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

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). 

Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Rules and Regulations 55501 

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 

55502 Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Rules and Regulations 

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; 4830–01–P