Love is in the air today and a few sticky COBRA situations are brewing too.

One of the qualifying events for COBRA is the divorce or legal separation of a covered employee. When love goes wrong and a newly-divorced spouse loses coverage, he or she may be entitled to benefits under COBRA. Seems straight-forward, but here’s the problem: COBRA coverage can be expensive and often the still-insured spouse is ordered to pay for this coverage as part of the divorce settlement.

It’s very, very tempting for the employed spouse to “forget” to report the divorce to his or her employer. Then, coverage of the divorcee can continue as usual with the employer unknowingly subsidizing the premium.

Aside from the fact that this is FRAUD, it may go well for the employee until there is a dependent audit OR the employee forgets about the omission, gets remarried, and tries to add the NEW SPOUSE to the plan. Yes, this scenario happens all the time!

What do you do if you’re the HR professional faced with this sticky LOVE GONE WRONG COBRA situation?

 If you have a COBRA administrator, contact the company immediately. Also, review all of your COBRA notice documents carefully as they relate to this employee. You should have:

•  A copy of the initial COBRA Rights notice, which was sent to the couple, and a copy of the plan documents, which were provided to them.
• Proof of mailing from the United States Postal Service indicating the date when the Initial COBRA Rights letter was mailed to them. This COBRA notice advises the employee and former spouse of their rights and responsibilities, including the responsibility to report any divorce to your company or the plan within 60 days.  

Check to make sure that no record of notification of the divorce was ever received from either the employee or the former spouse within 60 days of the date of  the divorce. Make sure that supervisors were not notified.

Once all of the information is gathered, contact your attorney and the carrier(s) involved and build your documentation. 

If the employee was never notified of his or her COBRA rights, there’s nothing you can do. However, if the employee WAS notified of his or her COBRA rights and responsibilities and you have proof of the COBRA notice, and you can also prove that your company was never notified of the divorce, he or she could be expected to repay premiums. He or she could also be subject to disciplinary action up to and including termination of employment (which in this situation, interestingly, is likely NOT a COBRA event since this would probably be considered gross misconduct). Lastly, the employee could face legal action to recapture the premiums to which he or she was not entitled.

As you can see, it’s imperative that you keep good COBRA documentation and that you have proof that COBRA notices were sent before and after any COBRA qualifying event. When LOVE GOES WRONG, COBRA often does too!