Divorce Requires Timely COBRA Notification

Wednesday, November 04, 2009

While not all divorces become as difficult as the couple battling it out in the movie The War of the Roses, some give new meaning to the word difficult or never-ending. Some divorces head to court to battle over items such as assets, custody or even who will be paying for the health care coverage after the divorce. When the dust finally settles is when an unsuspecting employer may be brought into the mix when health care coverage ends or COBRA is requested.

A divorce between two spouses went through several phases in the courtroom. The employer was only involved with the proceedings as far as responding to a letter of request to value the employee’s assets. The final divorce decree was signed on November 6, 2006. The employer knew nothing about this until June 2007, when the ex-spouse requested COBRA coverage.

Upon notification of the divorce, the employer notified the ex-spouse in a letter that she was not eligible for COBRA due to the fact that she failed to provide the employer with timely notice of her divorce. She took the employer to court, Doreen Ludwig vs. Carpenters Health & Welfare Fund of Philadelphia, arguing that ERISA requires she receive COBRA health coverage and also according to her divorce decree.

While many divorces include wording to require a spouse to pay for COBRA coverage, or in this case pay a portion of the COBRA coverage, the time lines to request COBRA still remains intact. When a covered employee or COBRA Qualified Beneficiary provides notice of an event such as a divorce, that notice must be provided within a specific time frame--usually 60 days from the date coverage is lost.  After 60 days, COBRA does not need to be offered. In this case, the employer first became aware of the divorce in April 2007, and it first received written notice of the divorce in June 2007, both well after the 60-day time frame to be notified.

The ex-spouse insisted that the employer was aware of her divorce in advance of it being finalized. She contended that because the employer was aware she didn’t need to notify them of the final divorce date. However the court saw it differently stating that a “pending divorce” is not a qualifying event requiring COBRA coverage to be offered. Therefore, when it was finalized it was pertinent to notify the employer and request the COBRA coverage within the proper time frames.

The ex-spouse also assumed her health coverage would continue because of an oral conversation during an appearance in court, following the divorce being finalized, where she was told that a union member had informed her former spouse that she would be extended COBRA benefits. The employer was not present during these proceedings and had claimed there was no merit in this statement. This argument by the ex-spouse was found to be insufficient to obligate the employer to continue the coverage.

The court denied anything for this ex-spouse and agreed with the employer on the COBRA denial. However, this is a good reminder to employers to be careful when reviewing divorces. An important aspect is to make sure that the employer sent out the General Notice indicating the time frames to be notified of a divorce. The other item of concern would be if an employee removes a spouse in anticipation of a divorce. Not all divorce cases are cut and dry as this one turned out to be for the employer, so caution and keeping up with all required notices is a good tactic to take.