Heath Insurance in Divorce

[Hartwell]

I am recently divorced (Texas) and under the terms of the final decree, I am required to pay my ex-wife’s premiums until such time that a new policy is issued. On April 2, my controller (I own the company) sent my ex a letter advising that pursuant to her written request to continue under our group plan, that a new policy had been issued. In his letter her provided her with the new policy number, etc., and advised her that unless the premium was RECEIVED on or before May 2, a full month later, that the policy would be canceled. Less than a week later, we sent her a copy of the actual policy.

On May 2, the date set as the deadline for receipt of her premium, we still had not received her premium. As a curtsey, shortly before noon I sent her an email and left a voicemail advising that we had we had not received her premium and reminded her that unless we received it before the close of business that day, her policy would be canceled. She acknowledged receipt of the messages but made no effort to pay the premium. Therefore, her policy was canceled at the close of business on May 2.

The next day, May 3, she showed up at my office with a check in hand for the premium. We refused to accept it because 1) the policy had already been canceled and 2) I do not want her on the plan because she abuses the benefit by consulting doctors gratuitously resulting in a deplorable claims experience creating much higher premiums for the entire group. Therefore, we refused to accept her check.

Now her attorney is making all kinds of noise about a 60-day rule under COBRA. However, my understanding of the rule he is talking about is that it is the beneficiary’s right to elect coverage, not the employer’s right to expect premium payment once the coverage has been elected. Since she made the election in writing several weeks ago, I think his argument is misguided. Besides, I don’t believe COBRA is relevant here in Texas anyway. My understanding is that the law here is governed by Texas Health Insurance Continuation (or words to that effect), not COBRA.

My question is, given these circumstances, am I on solid legal ground in canceling her health policy?

Thank you.

 

[cbg]

Absolutely not. COBRA is a Federal law and all fifty states are subject to it, regardless. If your company has twenty or more employees, you are subject to COBRA regardless of what state you are in.

Under COBRA, a qualified beneficiary (that's your wife) has 60 days to make the election and 45 days from the date of the election to make payment. That is an absolute right and starts from the day the original policy was cancelled or the day of notification, whichever is later. In this case, that appears to be April 2.

Based on the information provided, your ex-wife was well within her COBRA election period and by refusing to accept her premium, you have violated Federal law. Your ex-wife can file a complaint with the US DOL. That won't be pretty.

My advice to you is to accept that premium and get her insurance back in activation as quickly as you can.

 

[Hartwell]

CBJ

Thanks for your response. After receiving it, I looked the COBRA regs up online and the 45-day premium payment deadline you cited is accurate. My understanding is that a beneficiary has 45 days after making election for coverage to pay the premium. Coincidentally, in this case the 45th day expired the day BEFORE she made the payment IF one counts the day of her election as day one. (Her written notice to accept coverage was made March 19 and her check, dated May 3 arrived on May 3rd.) So, that begs the question, how does COBRA count the 45 days? Is day one the day election is made? Most situations define the first day as the day of the event (ie. the airlines count the day a reservation is made as the first day as in "7 days advance booking" ).

I know this is hairsplitting... but I just need to understand the rules in order to be in compliance.

Thank you.

 

[cbg]

When we're talking about a 24 day difference, my opinion is that you would be well advised to accept it anyway. Opinions may vary as to whether May 3 is the 45 or the 46 day, but you are making it so obvious that you are looking for ANY reason to deny her coverage, which, as I recall, was court ordered? that this could backfire badly on you. I don't believe any court has specified whether the election date is day one or whether the day following the election date is day one, but as you point out yourself, this is hairsplitting.

 

[Hartwell]

Thanks again

Thanks again for your response. While it may be obvious that I prefer not to extend her coverage and the courts may indeed rule against me, it might be equally convincing that she pushed the envelope just to see how far it could be pushed. That, incidentally, was the pattern during our 3 1/2 year divorce... which is why it took 3 1/2 years! Tell her she has to do something and... voila!... she'll do the exact opposite. The case in question punctuates that point precisely. Consider why...

1) The decree makes our mutual rights and obligations with respect to her health insurance clear.
2) My contoller's letter to her requiring payment no later than May 2 was crystal clear.
3) My curtsey messages to her before noon on May 2 reminding her to get the premium to us before the close of business that day were clear. (She doesn't work and lives less than 5 minutes from my office).
4) She ignored all that chosing instead to wait until the next day, the day AFTER the published deadline, to act.

Her behavior, it might be argued, was in-your-face-defiance. These are all well documented facts. I find it hard to believe that a court would rule in her favor. But then , hey, OJ's still Tee-ing 'em up. isn't he?

 

[cbg]

Hey, it's your call. If you feel comfortable going in and telling the judge that you cancelled the coverage that was ordered because according to one count she was 24 hours late with the premium, it's no skin off my nose.

Don't think the US DOL will care for your argument, though.

 

[Hartwell]

24 hours

Well, actually the DOL will rule objectively, not subjectively. They'll rule according to COBRA regs... not in accordance with their interpretation of our respective motives. Although I appreciate your help, I think you are wrong about the 24-hour issue. Clearly, one day does, in fact, make a big difference. Don't think so? Try paying your taxes on April 16th.

 

[cbg]

But my point is, I don't think there's ever been a definitive ruling on whether the election day counts as day one. And don't kid yourself that the DOL doesn't take intent into consideration.

 

[Beth3]

Hartwell, do yourself a favor and take your ex-wife's premium payment, as tempting as it is to deny coverage on a technicality. It's not worth it.

Given the pattern of behavior you describe, I suspect you can count on your ex being legitimately late with a premium payment not too far down the road, at which time you can cancel coverage. FYI, monthly COBRA premium payments have a 30 day "grace" period, so you cannot cancel coverage until the 31st day she's past the actual premium due date.