couple on COBRA- does not notify of divorce w/in 60 days

[Guest Compliance questioner]

We have a sticky situation and welcome other perspectives.

An employee terminated 1/31/02. She and her spouse were offered COBRA on 2/20/02. They enrolled (and it appears) that both signed the enrollment form on 4/2/02.

On 5/14, they both call (same call, different extensions) stating they are divorced and "think" they divorced in late January (they are unsure of exact date). At that time, we express dismay that they did not notify anyone of divorce within 60 days. Former employee says she did notify someone, but can't tell us who or when. We advise them to submit documentation ASAP as to the actual date of divorce.

We believe that the divorce occured 1/30/02, although we don't have the documentation (we believe another location has received it around 5/24).

We believe it can be shown that they were sent an initial notice, sent to the home, and addressed to both.

The carrier goes "by the book", and we don't believe that they will permit the 36 month extension for failure to notify within 60 days, but can they cancel the ex-spouse off of the coverage. If the divorce did indeed take place 1/30/02, he was a "spouse" at some point during 1/30/02, which is the date before the qualifying event. So is he or isn't he a Qualified Beneficiary that can stay on coverage at least 18 months?

Can the carrier drop the ex-spouse due to failure to notify of the divorce and/or signing up for COBRA as "employee plus spouse"?

[Guest HAP]

Here's my reading of the situation:

Even though the spouse seemed to be a dependent to the employee at the time of her qualifying event, the divorce would put him off the benefits by 1/31/02 at the latest; therefore, the only right he would have to COBRA would be through the divorce qualifying event. If the employee didn't notify the employer of the divorce within 60 days, then the ex-spouse would have no rights to the continuation benefits.

[Jbentz]

Okay, i am going to take a stab at this one. You have several issues because the employee and spouse had two qualifying events so close together:

Since they did not notify you (does your initial notice say that it has to be written documentation?) or they have no proof that they notified you, i do not think you have to offer the spouse the 18 extension. Be aware that since the divorce and the termination happened close to the same time, since one of the them claims that a call was made, when the COBRA notice was received, they may have thought it was for the divorce or for both.

I don't think you can deny the spouse COBRA becasue you have a signed document in your hand. It is clear that their INTENT was to have COBRA for the both of them. Also, how is your form worded? Could they BOTH have signed up SEPARATELY on the form or are the choices employee, employee and spouse, and employee and family?

Anyone else?

[mroberts]

When talking about the 60 day rule for electing COBRA, the former employee or divorced spouse has 60 days from notification of COBRA rights to decide whether he or she wants the coverage. This is not necessarily going to be 60 days from the date of the event that triggered COBRA. When did you mail out COBRA notices? If you didn't mail it out until February 1st, then even if the participants signed the election of COBRA form on April 2nd, they most likely did so within 60 days of notification.

[Mary C]

I think mroberts missed the point regarding the 60 days. Actually, the COBRA regs and guidance state that an employee or divorced spouse has 60 days to tell the company or health care plan of the divorce in order for the ex-spouse to receive COBRA. If they divorced 1/30, the call in May was way outside the 60 days in which to notify the plan in order for the ex-spouse to be eligible for COBRA.

[mroberts]

maryc - you are definitely correct that I misread the post. I thought it was referring to the time needed to make an election. I recant my previous post. Don't beat me!

[Guest Compliance questioner]

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I was talking about the 60 days that an employee/spouse/dependent has to notify the plan administrator of a divorce, loss of dependent status, or Medicare entitlement. The plan administrator is stating that they didn't receive the notice from the employee (I guess this employee is quite well known to the benefits dept), but the employee said she did notify the employer, but was rather vague to to when and to whom, and said she did only when informed that it might be problematic since notice fo the divorce wasn't received earlier.

[Guest HAP]

I just realized that I neglected to list out a lot of my assumptions:

Assumption

1) the mailing of the initial notice to both ee & spouse was documented & that said notice contained wording regarding family status change responsibility,

2) furthermore, there is COBRA responsibility outlined in the SPD availible to the employee and spouse at the time of qualifying event

3) the ee did not notify the employer or plan administrator within 60 days of the divorce occuring in accordance with said letter & SPD, and

4) there is wording in the notice of election rights that those rights are revocable if it's determined the QB did not meet plan requirements at time of election.

All this being true, the ex-spouse would not be eligible for any amount of COBRA.

#3 being true and all of the rest questionable, the spouse still wouldn't be eligible for COBRA but you might consider offering him 36 months of COBRA to avoid messiness while rewording your letters & plan doc for ongoing use.

#3 being false (they did notify of divorce), the spouse should be offered COBRA for a total of 36 months from the loss of coverage due to divorce.

Unless the SPD allows spouse eligibility after the date/month of divorce, the ex-spouse would not be eligible for the 18 months of COBRA due to termination.