• About
    • Who We Are
    • How We Work
    • Leadership
    • Diversity, Equity & Inclusion
    • Community
    • Careers
    • Locations
  • Solutions
    • Employee Benefits
    • Executive Risk Solutions
    • HR Services
    • M&A Advisory
    • Private Client Services
    • Property & Casualty
    • Retirement Services
    • Wholesale Benefits
    Menu
    • Employee Benefits
    • Executive Risk Solutions
    • HR Services
    • M&A Advisory
    • Private Client Services
    • Property & Casualty
    • Retirement Services
    • Wholesale Benefits
    Services
    • ABD Total Solution
    • Claims Management
    • Contract Review
    • Global
    • Occupational Health & Safety
      and Workers’ Compensation
    • Surety
    Menu
    • ABD Total Solution
    • Claims Management
    • Contract Review
    • Global
    • Occupational Health & Safety
      and Workers’ Compensation
    • Surety
  • Industries
    • Cannabis
    • Clean Technology
    • Construction
    • Entertainment
    • Financial Institutions and Fintech
    • Food and Beverage
    • Healthcare
    • Life Science
    • Maritime
    Menu
    • Cannabis
    • Clean Technology
    • Construction
    • Entertainment
    • Financial Institutions and Fintech
    • Food and Beverage
    • Healthcare
    • Life Science
    • Maritime
    • Nonprofit and Social Enterprise
    • Private Equity and Venture Capital
    • Public Sector
    • Real Estate
    • Real Estate Investment Trust (REIT)
    • Sharing Economy
    • Technology
    Menu
    • Nonprofit and Social Enterprise
    • Private Equity and Venture Capital
    • Public Sector
    • Real Estate
    • Real Estate Investment Trust (REIT)
    • Sharing Economy
    • Technology
  • ABD Insights
    • Events
    • Blog
    • Press
    • Resources
  • Contact
  • ABD Connect

Contact

Menu
  • About
    • Who We Are
    • How We Work
    • Leadership
    • Diversity, Equity & Inclusion
    • Community
    • Careers
    • Locations
  • Solutions
    • Employee Benefits
    • Executive Risk Solutions
    • HR Services
    • M&A Advisory
    • Private Client Services
    • Property & Casualty
    • Retirement Services
    • Wholesale Benefits
  • Services
    • ABD Total Solution
    • Claims Management
    • Contract Review
    • Global
    • Occupational Health & Safety & Workers Compensation
    • Surety
  • Industries
    • Cannabis
    • Clean Technology
    • Construction
    • Entertainment
    • Financial Institutions and Fintech
    • Food and Beverage
    • Healthcare
    • Life Science
    • Maritime
    • Nonprofit and Social Enterprise
    • Private Equity and Venture Capital
    • Public Sector
    • Real Estate
    • Real Estate Investment Trust (REIT)
    • Sharing Economy
    • Technology
  • ABD Insights
    • Events
    • Blog
    • Press
    • Resources
  • Contact
  • ABD Connect
  • ABD Home
  • Blog

In the Event of a Divorce, Terminate the Ex-Spouse

  • July 22, 2017
  • Brian Gilmore
  • Compliance
Share
Share on linkedin
Share on facebook
Share on twitter
Share on email

Often employees neglect to inform their employer of a divorce and the ex-spouse remains covered under insurance.  What is the best way to correct this?

Question:  We had an employee just notify us of a divorce that occurred six months ago.  The former spouse has been covered under the health plan for the entire period after the divorce.  What do we do?

Compliance Team Answer:

A former spouse is never eligible for the plan and therefore must be removed from the plan whenever the plan receives notice—even if it received notice very late.

Unless this employee resides in Massachusetts (which has a unique state mandate related to former spouse coverage), no court order could provide eligibility to a former spouse for any period after the divorce is finalized.  The former spouse could have elected COBRA, and the employee could have assisted in paying for the ex-spouse’s COBRA coverage, but there is never any option (outside of a fully insured plan in Massachusetts) to cover a former spouse under active coverage.

The main issues are:

  • When will the former spouse’s coverage terminate?
  • Will the former spouse have COBRA rights?
  • Any disciplinary actions against the employee?

1) Termination of Coverage Date

There is a special exception from the ACA prohibition of rescission rule that permits the plan to retroactively terminate the former spouse’s coverage back to the date of the divorce regardless of when the plan receives notice.  So the company could retroactively terminate the former spouse’s coverage dating back to the divorce (or the first of the month following the divorce) if you the company chooses to.

In other words, although the default termination date for coverage will always be prospective, the company could retroactively terminate coverage if it prefers to attempt to recoup the back premiums (fully insured) or claims (self-insured) it paid for the ineligible former spouse’s coverage/benefits during that period.  There is no legal barrier to retroactive termination of coverage here because the employee failed to timely notify the company of the divorce.

2) COBRA for Former Spouse

The COBRA rules provide a window of 60 days from the date of the event to notify the plan of divorce/legal separation.  The employee/former spouse missed that window, and therefore the former spouse has technically lost all COBRA rights under the plan.

In some situations, the carrier (or stop-loss provider if self-insured) may agree to an exception if the timeframe is reasonably close to the 60-day limit.   In any case, the former spouse should not be provided with a COBRA election notice unless the carrier specifically approves an exception to the 60-day notice requirement.

3) Disciplinary Action

The company may have employment disciplinary policies against this form of fraud or intentional misrepresentation of a material fact that resulted in the former spouse continuing active coverage well after the divorce.  The company may consider reviewing its handbook and internal policies to see if that’s an option they would like to pursue here.

Regulations:

Treas. Reg. §54.4980B-6, Q/A-2(a):

Q-2.  Is a covered employee or qualified beneficiary responsible for informing the plan administrator of the occurrence of a qualifying event?

A-2. (a) In general, the employer or plan administrator must determine when a qualifying event has occurred. However, each covered employee or qualified beneficiary is responsible for notifying the plan administrator of the occurrence of a qualifying event that is either a dependent child’s ceasing to be a dependent child under the generally applicable requirements of the plan or a divorce or legal separation of a covered employee. The group health plan is not required to offer the qualified beneficiary an opportunity to elect COBRA continuation coverage if the notice is not provided to the plan administrator within 60 days after the later of—

(1) The date of the qualifying event; or

(2) The date the qualified beneficiary would lose coverage on account of the qualifying event.

(b) For purposes of this Q&A-2, if more than one qualified beneficiary would lose coverage on account of a divorce or legal separation of a covered employee, a timely notice of the divorce or legal separation that is provided by the covered employee or any one of those qualified beneficiaries will be sufficient to preserve the election rights of all of the qualified beneficiaries.

Model COBRA Notice:

http://www.dol.gov/ebsa/modelgeneralnotice.doc

For all other qualifying events (divorce or legal separation of the employee and spouse or a dependent child’s losing eligibility for coverage as a dependent child), you must notify the Plan Administrator within 60 days [or enter longer period permitted under the terms of the Plan] after the qualifying event occurs.  You must provide this notice to: [Enter name of appropriate party].  [Add description of any additional Plan procedures for this notice, including a description of any required information or documentation.]

ACA FAQ Part II:

http://www.dol.gov/ebsa/faqs/faq-aca2.html

Similarly, if a plan does not cover ex-spouses (subject to the COBRA continuation coverage provisions) and the plan is not notified of a divorce and the full COBRA premium is not paid by the employee or ex-spouse for coverage, the Departments do not consider a plan’s termination of coverage retroactive to the divorce to be a rescission of coverage. (Of course, in such situations COBRA may require coverage to be offered for up to 36 months if the COBRA applicable premium is paid by the qualified beneficiary.)

 

Disclaimer: The intent of this analysis is to provide the recipient with general information regarding the status of, and/or potential concerns related to, the recipient’s current employee benefits issues. This analysis does not necessarily fully address the recipient’s specific issue, and it should not be construed as, nor is it intended to provide, legal advice. Furthermore, this message does not establish an attorney-client relationship.  Questions regarding specific issues should be addressed to the person(s) who provide legal advice to the recipient regarding employee benefits issues (e.g., the recipient’s general counsel or an attorney hired by the recipient who specializes in employee benefits law).

Brian Gilmore

Brian Gilmore

Brian Gilmore is the Lead Benefits Counsel at ABD. He assists clients on a wide variety of employee benefits compliance issues. The primary areas of his practice include ERISA, ACA, COBRA, HIPAA, Section 125 Cafeteria Plans, and 401(k) plans. Brian also presents regularly at trade events and in webinars on current hot topics in employee benefits law.
The information provided is of a general nature and an educational resource. It is not intended to provide advice or address the situation of any particular individual or entity. Any recipient shall be responsible for the use to which it puts this document. ABD shall have no liability for the information provided. While care has been taken to produce this document, ABD does not warrant, represent or guarantee the completeness, accuracy, adequacy, or fitness with respect to the information contained in this document. The information provided does not reflect new circumstances, or additional regulatory and legal changes. The issues addressed may have legal, financial, and health implications, and we recommend you speak to your legal, financial, and health advisors before acting on any of the information provided.
Stay connected.
Anytime, anywhere.
LEARN MORE
ABD Global Reach
Worldwide Broker Network

500 offices • 100 countries • 6 continents

About
  • Who We Are
  • How We Work
  • Leadership
  • Diversity, Equity & Inclusion
  • Community
  • Careers
  • Locations
Menu
  • Who We Are
  • How We Work
  • Leadership
  • Diversity, Equity & Inclusion
  • Community
  • Careers
  • Locations
Solutions
  • Employee Benefits
  • Executive Risk Solutions
  • HR Services
  • M&A Advisory
  • Private Client Services
  • Property & Casualty
  • Retirement Services
  • Wholesale Benefits
Menu
  • Employee Benefits
  • Executive Risk Solutions
  • HR Services
  • M&A Advisory
  • Private Client Services
  • Property & Casualty
  • Retirement Services
  • Wholesale Benefits
Industries
  • Cannabis
  • Clean Technology
  • Construction
  • Entertainment
  • Financial Institutions and Fintech
  • Food and Beverage
  • Healthcare
  • Life Science
  • Maritime
Menu
  • Cannabis
  • Clean Technology
  • Construction
  • Entertainment
  • Financial Institutions and Fintech
  • Food and Beverage
  • Healthcare
  • Life Science
  • Maritime
 
  • Nonprofit and Social Enterprise
  • Private Equity and Venture Capital
  • Public Sector
  • Real Estate
  • Real Estate Investment Trust (REIT)
  • Sharing Economy
  • Technology
Menu
  • Nonprofit and Social Enterprise
  • Private Equity and Venture Capital
  • Public Sector
  • Real Estate
  • Real Estate Investment Trust (REIT)
  • Sharing Economy
  • Technology
ABD Insights
  • Events
  • Blog
  • Press
  • Resources
Menu
  • Events
  • Blog
  • Press
  • Resources
Contact
  • Contact
  • hello@theabdteam.com
Menu
  • Contact
  • hello@theabdteam.com
ABD Connect
Facebook-f
Twitter
Linkedin-in

ABD Corporate Headquarters: 777 Mariners Island Blvd., Suite 250 | San Mateo, CA  94404 | 650-488-8565

©2021 ABD Insurance and Financial Services. All rights reserved. Privacy Policy | License #OH55918