Flex Plan with COBRA concerns

[Guest Katherine S. Dodson]

Employee divorced spouse last fall, failed to notify Plan administrator to delete spouse within 30 days. Now has remarried and wants to add new spouse, can we allow him to delete old spouse or must he wait until open enrollment? Also, he wants to purchase COBRA coverage on x-spouse, do we charge him retro to divorce date, even though he has been paying for her coverage through his regular premium payment? Technically, the x-spouse is no longer eligible as of divorce date, even though the employee failed to properly and timely notify the Plan administator.

[Guest Phil Larson]

I believe that the spouse is no longer eligible for coverage under your plan (more than likely not dependent and not spouse under your plan eligibility). That means her coverage should be dropped and that your team member was probably paying for coverage that could have been denied (make sure no claims by spouse after divorce).

Also, I believe as long as your SPD states the COBRA language accurately, COBRA rights are lost for ex-spouses who fail to notify the plan within 60 days of a divorce. Thus, no COBRA need be offered to the ex-wife.

[jeanine]

Although Phil is probably correct on this, we would still offer COBRA to the ex-spouse. Why? Well for the first thing we are always afraid that we may have done something even the slightest bit incorrectly in administering some company's COBRA and we don't want to be a named defendant in the COBRA update we receive. A little while ago, we undertook a mass mailing to all employees and spouses for another COBRA Initial Notification that was updated to include COBRA 2000 information. Unless you have excellent control and documentation that all employees and spouses have received a notification of COBRA rights, I would hesitate to decline COBRA to the ex-spouse. All she has to do is claim that she never had notice of her duties and rights to receive COBRA coverage. As I said, we are probably a little too cautious.

[JWK]

Jeanine's caveats are well-taken. I would just add that a majority of courts that have addressed the issue have held that the plan's obligation is to prove that initial COBRA notices were sent to the employee and his or her spouse, not that they were actually received. So the former spouse would probably not prevail merely by claiming that he/she did not actually receive the notice. But as Jeanine points out, even proving that an initial COBRA notice was sent to a former spouse is not necessarily a slam dunk.