---

Family

Print

---

COBRA and Divorce
By Teresa S. Renaker, Partner, Lewis, Feinberg, Lee, Renaker & Jackson, P.C., Oakland

About the author:
Teresa S. Renaker specializes in ERISA law and is a frequent speaker on such related issues as preemption, class actions, and subrogation. Ms. Renaker may be contacted at trenaker@lewisfeinberg.com.

Introduction
Covered Plans
Qualifying Beneficiary and Event
Notice by Employee or Qualified Beneficiary
Notice by Plan Administrator
Time for Making Election
Applicable Premium
Duration of Coverage
Department of Labor Information
Cal-COBRA for Small Employer Plans

Introduction
Amendments to ERISA effected by the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) provide individuals who stand to lose coverage under private-employer-sponsored group health plans the right to elect to continue those benefits for limited time periods under certain circumstances. They include: voluntary or involuntary separation from employment, reduction of work hours, death of the employee, and divorce. This article summarizes the key features of COBRA as it pertains to marital dissolution and legal separation in California. It also briefly discusses California’s version of COBRA.

Covered Plans
In general, a group health plan is required to provide continuation coverage if all private employers maintaining the plan normally employed 20 or more employees on a typical business day during the preceding calendar year. ERISA §601(b).

Qualifying Beneficiary and Event
COBRA continuation coverage must be provided for “qualified beneficiaries” of covered employees if a “qualifying event” occurs. A qualified beneficiary is someone who, on the day before the event, was a beneficiary under a group health plan as a spouse or dependent child of the employee. ERISA §§601(a),607(3)(A)(i)–(ii). Note that domestic partners are not qualified beneficiaries (see 1 USC §7), but group health plans that provide coverage to domestic partners will often voluntarily provide continuation coverage to domestic partners.

A “qualifying event” is one that, but for the continuation coverage, would result in a loss of group health plan coverage–including the divorce or legal separation of the covered employee from his or her spouse. ERISA §603(3).

Notice by Employee or Qualified Beneficiary
ERISA requires the covered employee or qualified beneficiary to notify the plan administrator of a divorce or legal separation within 60 days after the date of the divorce or legal separation. 29 USC §1166(a)(3).

Notice by Plan Administrator
When a plan administrator receives notice of a divorce or legal separation, it must notify the beneficiary spouse of the right to continuation coverage within 14 days. However, multiemployer plans may set a longer notice period, and a plan is not required to provide continuation coverage to a qualified beneficiary who fails to elect coverage within the election period (see Time for Making Election). ERISA §§601(a), 606(c).

When a spouse is notified of COBRA rights, the notice is effective “as to all other qualified beneficiaries residing with such spouse at the time such notification is made.” ERISA §606(c). That is, only one notice will be provided for a former spouse and dependent children residing with that spouse.

Time for Making Election
A beneficiary spouse must have at least 60 days from the date of the COBRA notice within which to elect continuation coverage. An election of continuation coverage by a spouse is deemed to include an election of continuation coverage on behalf of any other qualified beneficiary who would lose coverage under the plan. ERISA §605(a)(1), (2). Because the election period runs from the date of the notice, it is important to guard against the possibility of a misdirected COBRA notice. Practitioners should ensure that the plan administrator has a current address for the beneficiary and that the address is kept up to date.

Applicable Premium
ERISA premium provisions allow an employer to pass on the cost of providing continuation coverage to the qualified beneficiary, including a 2-percent charge for administration. Generally, the “applicable premium” for this is the plan’s cost for coverage during the relevant period for similarly-situated beneficiaries (who did not have a “qualifying event”). Special rules, however, apply to non-insured (self-funded) plans. ERISA §604(1), (2)(A).

Duration of Coverage
Continuation coverage lasts for up to 36 months from the date of divorce or legal separation. Special rules apply, however, if a covered employee and spouse are already receiving COBRA coverage at the time of divorce or legal separation because of a prior termination of employment or reduction of hours. ERISA §602(2)(A).

Continuation coverage will terminate before 36 months if any of the following occurs (ERISA §602(2), (3)):

• The employer ceases to provide any group health plan to any employee;
  
• The qualified beneficiary fails to make timely payment of the applicable premium;
  
• The qualified beneficiary becomes covered under any other group health plan that does not contain any exclusion or limitation with respect to a preexisting condition of that beneficiary; but other group health coverage that predates the COBRA election will not disqualify the beneficiary from receiving COBRA coverage;
  
• The qualified beneficiary becomes entitled to Medicare benefits.

Department of Labor Information
A useful summary of the federal COBRA provisions is available through the U.S. Department of Labor’s web site at: http://www.dol.gov/dol/topic/health-plans/cobra.htm.

Cal-COBRA for Small Employer Plans
For private group health plans that are not covered by federal COBRA because the sponsoring employer has fewer than 20 employees, California law includes its own continuation coverage requirements, known as “Cal-COBRA.” Ins C §§10128.50–10128.59; Health & S C §1366.23. Cal-COBRA requires that insurers and health care service plans offer continuation coverage to qualified beneficiaries (defined as any individual covered under a health plan) upon the occurrence of a reduction in or termination of benefits. Ins C §10128.51(c). However, persons who are covered, become covered, or are eligible for federal COBRA coverage are not eligible for Cal-COBRA coverage. Ins C §10128.52(c).

Cal-COBRA generally tracks federal COBRA and, like its federal counterpart, provides continuation coverage for up to 36 months. Ins C §10128.57. There are, however, a few exceptions. For example, the premium allowed to be charged to a qualified beneficiary is up to 110 percent for the first 18 months of coverage, rather than up to 102 percent under federal COBRA. Ins C §10128.56.

*Portions of this article were reprinted from Chapter 9, “Employee Welfare and Other Nonpension Benefits,” by Teresa S. Renaker, in Dividing Pensions and Other Employee Benefits in California Divorces.

How would you rate your level of interest in “COBRA and Divorce” high medium low

What other subjects would you like to see covered in CEB Topics?

Back to top

Dividing Pensions and Other Employee Benefits in California Divorces