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Q. If an employee drops a spouse from their group health coverage at open enrollment in anticipation of a divorce, are we still required to offer COBRA coverage to the employee’s spouse? If so, when?
A. Yes, you are still required to offer COBRA coverage to the spouse from the date of the divorce, not from the loss of coverage date due to the open enrollment drop. Section 4980B-4 of the Internal Revenue Code states that if coverage is eliminated in anticipation of a qualifying event, such as a divorce or legal separation, the elimination is disregarded in determining a loss of coverage for COBRA purposes. Because the law’s intent is to provide continuation coverage due to a divorce or legal separation, simply dropping coverage during open enrollment is not a way to circumvent COBRA coverage. While the spouse can be dropped from the group plan at open enrollment when the divorce becomes final, the spouse or employee will have at least 60 days to inform the employer or plan administrator of the divorce, and COBRA continuation must be offered as of the date of the divorce. The Internal Revenue Service (IRS) made this clear in Revenue Ruling 2002-88.
How does the employer know when the divorce is final so that they can meet their legal obligations? Remember, you are required to send or add a general COBRA notice in to your summary plan description to all new participants. In that notice, the employer is required to explain both their own COBRA obligations and those of the participants, including guidance on the allowable notification timeframes. Those notices are for all plan dependents, not just employees. COBRA states that employers must give participants at least 60 days to notify them of a divorce or legal separation; that 60-day timeframe has to be communicated in the general COBRA notice. If the employer meets this obligation, and neither the employee nor spouse notifies the employer or plan administrator with 60 days of the date of divorce or legal separation, the employer’s COBRA obligations have been met.
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Q. When can I call an Account Manager with questions?
A. Our Account Managers are available at 608-662-7474 Monday through Friday from 8 a.m. to 4:30 p.m. central time.
Either you or your employee can call us directly and be assured of prompt answers. Employees are encouraged to call with any benefit-related questions, including claims and billing issues, network availability, individual insurance for a recent graduate, COBRA questions, 401K options, or any other questions that come up.
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What are the HSA contribution limits for 2009 & 2010?
For 2009
Single Contribution $3,000
Family Contribution $5,950
Catch-up Contribution 55 or older $1,000
For 2010
Single Contribution $3,050
Family Contribution $6,150
Catch-up Contribution 55 or older $1,000 -
Q. What do I do when and employee is laid off of work?
Employees on the active group policy who are laid off would become ineligible for active coverage upon the lay off, but would be eligible for COBRA/State Continuation depending on your group size. If an employee covered by your benefit plan is laid off, please report their last day of work to the carrier's enrollment department as soon as you are aware of the lay off. The employee should be provided their notice for COBRA or WI Continuation of benefits. -
Does an employer have to offer COBRA coverage to a qualified beneficiary if he/she becomes entitled to Medicare before the qualifying event?
YES. When a qualified beneficiary is entitled to Medicare prior to electing COBRA coverage, he/she still can elect to receive COBRA coverage. Because of the Medicare Secondary Payer Rules, the COBRA offer cannot be withheld because of Medicare entitlement. -
When does an individual's entitlement to Medicare terminate COBRA coverage?
If a qualified beneficiary's Medicare entitlement occurs after COBRA coverage is elected, the qualified beneficiary's COBRA coverage can be terminated even though Medicare does not provide a benefit package as generous as the COBRA coverage.
