COBRA

NaeNae55

I used to know this, but haven't had it ever come up before and can't find my book on it so...

We just started a new insurance year (health). I had one employee take his entire family off the plan (his wife had a better offer through her work) and another employee drop her spouse off the plan.

I am sure I don't have to offer COBRA in the first situation, but I am concerned about the 2nd. The employee told me the spouse no longer needed coverage due to Medicare Part D (she said she only had him on the plan for drug coverage). Do I need to send a COBRA notice to the spouse?

I am especially concerned as she mentioned that she is considering divorce. Should I just treat this as the first situation unless I actually hear she got divorced? And if I do, will it matter since she claimed she dropped him due to Medicare Part D?

I really hate it when I second guess myself so much that I end up this confused. Please help straighten me out.

Nae

FunHRBanker

If someone simply drops a dependent from their coverage, it is not a COBRA event. However, I think there are regs regarding dropping a soon to be ex-spouse. I'll keep looking and let you know if I find anything.

NaeNae55

Thanks for your reply. I know if an employee drops a spouse in anticipation of a divorce then the spouse gets COBRA (retro). However, she is still just thinking about it and hasn't made a decision yet. So can't I just treat it as if she dropped him without divorce in the picture? That is, can't I just forget about any COBRA?

Nae

mushroomHR

I will not drop a spouse or ex-spouse from coverage until the divorce is final and they show me a copy of their final papers. Dropping someone on an employee's word is too risky for me as they may be doing it for spite. I prefer to leave the spouse on until the divorce is absolutely final.

LarryC

I agree with Mushroom. I would wait for the COBRA "event" to happen first.

NaeNae55

In this case the employee told me when she turned in the paperwork that the reason she was dropping her spouse was due to Medicare Part D. The comments about thinking about a divorce were made in passing on another occassion. I think I have to act as if she is staying married (which I really think she will do) unless or until she tells me otherwise. Right?

njjel

Unless the spouse provides us written notice from their employer that they have coverage with them, we do not allow the employee to simply drop their spouse. In the case of a divorce we allow the employee to drop the spouse when we have seen a copy of their divorce decree. Then the spouse is sent COBRA paperwork.

E Wart

I think one item that has been missed in the other responses (that I think I understand from your message) is that this was during a "re-enrollment period". The employees didn't just come in and drop folks from coverage during the Plan year, but during re-enrollment period made a change to his/her coverage. This is fine. Anyone can, for any reason, drop/add dependents during this period and you do not need to send out COBRA. However, I do make sure that the employee understands that they will not be able to add this dependent back to their coverage (until the next re-enrollment) unless they meet one of the requirements... so do they really want to do this. I also think you are OK with the "divorce issue" since there was nothing officically in the works... just thinking.
However, I would be concerned if the employee is droping spouse because of MedicareD. Does this mean that she only had your coverage because of drugs? Also, not required to take Medicare D and won't be penalized if you have a qualified Plan. I don't know which is more beneficial for them. They need to think about this.
E Wart

njjel

Even at open enrollment time, we still do not permit employees to drop a spouse without proof of insurance. This could cause entanglements for both the employee and employer should the spouse file suit for unauthorized loss of their medical coverage.