Domestic relations qrder requires plan to maintain coverage for separated spouse?

[mal]

A self insured ERISA plan received an order from the local domestic relations court which requires it to cover a legally separated spouse as a dependent for purposes of eligibility. No minor children are involved.

The plan says legal separation is a COBRA event. Can the court trump the plan language? My belief is that the state order would be preempted and we should send the participant a COBRA notice. Any thoughts?

[Sandra Pearce]

I would have an attorney review the domestic relations order your plan has been served with. First, many states do not have Legal Separations. Possibly, the order you have been served with is just to prevent the employee from dropping the spouse in lieu of the pending divorce. Again, I would have an attorney review the document.

With all that said, if the person is legally separated and if your Plan Document clearly states that legal separation is a COBRA qualifying event, I would send a COBRA notice to the spouse and terminate coverage.

[Kirk Maldonado]

I agree with everything that Sandra Pearce says, but I would like to add one other observation.

People think that they are legally separated but that almost never occurs. To be legally separated, they have to get a court order. My understanding is that it is about as expensive to get a legal separation as a divorce, yet you are still married to the other person. My friend, who told me that, has been a domestic relations attorney for over 20 years and she has never seen a "legal separation."

[jsb]

Is the order on the Plan or on the employee?

Does the eligibility language for the plan specifically exclude a spouse who is legally separated? If so, I would contend that the court cannot require you to cover someone who is otherwise ineligible. But if not excluded, I'd put the spouse back on.

Now there may be a requirement or order on your employee to continue to provide coverage to the separated spouse (or even a divorced spouse - see these all the time), but that is not necessarily your problem. However, you state that this would be a loss of coverage under your plan so COBRA can provide a coverage option, at least for a while.

Sandra's suggestion (and Kirk's ditto) to have your attorney review the document is sound.

[mal]

The order is stamped and signed by the judge. It is not necessarily directed at the plan, but does say that the wife is to be treated as a spouse for purposes of health coverage.

I believe this order has to be preempted. How can a state court dictate rules of coverage that vary from the plan?

[Kirk Maldonado]

Mal:

You raise a good point. The law expressly provides that court orders can require coverage of children. The fact that the law doesn't mention spouses may mean that the court order cannot mandate coverage of an ex-spouse (or soon to be ex-spouse). However, it has been many years since I looked at this issue, so it is quite possible that my recollection is faulty. If anybody disagrees with my thoughts, please post a correction.

[Mary C]

Massachusetts and Rhode Island law both provide that ex-spouses (and legally separated spouses, too, I assume) are to remain on the plan if ordered by the court or divorce decree at the same cost as prior to the divorce until either spouse remarries, the employee is no longer employed, the ex-spouse turns 65 or becomes covered by another group plan.

For the attorneys out there - we challenged this law and lost.

[Mary C]

OOPs - just went back and read the original post. Since the plan is self-insured, it wouldn't be subject to state law.