Employer Bulletin

State & Local Health Employers
Vol. 19, No. 13
July 15, 2002

Health Continuation-Conversion Updates

Health Continuation-Conversion Notice Modified

Under the Group Health Insurance Program for state and local government employees, COBRA continuation of coverage is limited to the plan that the subscriber had as an active employee or covered dependent. Beginning January 1, 2002, the Group Insurance Board approved an exception when the continuant resides in a county that does not include a primary physician for the subscriber's plan at the time continuation is elected (Article 2, Section 2.9(1) of the health insurance contract). In this case, the continuant may elect a different plan that is offered in the county where he/she resides. This exception is described in section V.; Continuation of Health Coverage in the 2002 It's Your Choice book. Section V. is found on page C-22 of the state book, page C-20 of the graduate assistant book, or page C-21 of the local government book.

When you receive a Health Insurance Information Change, ET-2329, from the employee deleting a dependent (child or ex-spouse) from an existing family plan, ask the employee if the dependent lives in a different county. Once you have determined that the dependent lives in a different county, send the dependent an It's Your Choice booklet (ET-2108 for State Continuant, ET-2128 for Local Government Continuant and ET-2127 for UW Graduate Assistant Continuant). You can also refer the dependent to the It's Your Choice booklet on the ETF Internet site at etf.wi.gov to determine which plans are offered in their county.

To help identify a dependent or ex-spouse going on COBRA living in a different county than the subscriber, we have modified the Health Continuation-Conversion Notice, ET-2311, by adding another check box as follows:

DIFFERENT COUNTY:

• I live in a county that does not have a primary physician in the current subscriber's plan and I am selecting a different health plan.
• The covered participant (dependent or ex-spouse) will complete a Health Insurance Application, ET-2301 (or ET-2302 for Graduate Assistant Continuants). On the Health Insurance Application, under "A. Reason for Submitting Application," the applicant should check "other" and write "different county" in addition to checking the "COBRA" box.

New Health Continuation-Conversion Notice forms, ET-2311 (REV 05/2002), are available and supplies of It's Your Choice booklets for State Continuants, ET-2108, can be ordered by calling ETF at (608) 266-3302.

If you have questions regarding this provision, please call the Employer Communication Center at (608) 264-7900.

Reporting Requirements for Continuation of Health Insurance to an Eligible Divorced Spouse

An employee is responsible for informing his or her employer when a divorced spouse loses eligibility for coverage under the Group Health Insurance program. The employee's ex-spouse has the right to choose continuation of health insurance coverage under Federal COBRA continuation rights. Coverage of the ex-spouse under the employee's family plan continues until the end of the month in which the divorce decree is entered, or the end of the month the employer receives notification of the divorce, whichever is later.

If the employee fails to notify the employer about the divorce more than 30 days following the date of the divorce decree, coverage for the ex-spouse continues under the employee's family plan until the end of the month the employer receives notification of the divorce. If notice is given within 18 months of the divorce, the ex-spouse is entitled to continuation coverage for the balance of 36 months from the divorce date. If notice is given after 18 months from the divorce date, the ex-spouse is entitled to continuation coverage for 18 months. This provision is based on State continuation laws, § 632.897, Wis. Stats., not Federal COBRA continuation rights. Under Federal COBRA continuation rights, failure of the employee to notify the employer is grounds for not offering continuation.

Within 14 days after receipt of the notice from the employee, the employer must provide the divorced spouse with a Health Continuation-Conversion Notice, ET-2311. The divorced spouse must submit the Health Continuation-Conversion Notice to the Department of Employee Trust Funds within 60 days of receipt of the notice from the employer.

If the employee no longer has any dependents to insure, the employee must complete a Health Insurance Application changing coverage from family to single. The change in coverage and premiums for single becomes effective the first of the month following the month the employer was notified of the divorce, not retroactive to the first of the month following the date the divorce decree was entered.

EXAMPLE:

An employee has family coverage. The divorce decree is entered on May 15. On October 15 the employer discovers the employee is no longer married and has no dependents. The employee completes a Health Insurance Application switching from family to single coverage. The effective date of the change from family to single coverage is November 1, the first of the month, following the month the employer was notified by the employee about the divorce.

Continuation coverage for the employee's ex-spouse begins effective November 1, effective the first of the month on or after the employer was notified by the employee about the divorce, provided a Continuation-Conversion Notice is received by ETF. Employee Trust Funds will notify the divorced ex-spouse of the length of coverage. The length of coverage under continuation for this divorced ex-spouse is 36 months from the end of the month in which the divorce decree was entered (because notice was given within 18 months of the divorce). In cases where employer notification occurs more than 18 months following the divorce decree, coverage will be offered only for an additional 18 months as required by state law.

NOTE:

In the above example, the change from family to single coverage does not become effective retroactive to the month following the month the divorce decree is entered. It is important to not retroactively cancel the existing family coverage and take a refund back to the first of the month following the divorce decree. The divorced spouse is still covered under the employee's family plan through the end of the month the employer was notified of the divorce.

If an employee becomes divorced, changes from family to single coverage but fails to notify the employer about the divorce, coverage for the divorced spouse ceases until the employer receives notice of the divorce. When the employer receives notice of divorce, the employee's ex-spouse must be offered continuation coverage (effective on the date of the change to single coverage) for a period of 18 months or the remainder of 36 months, whichever is longer. The employee's ex-spouse must pay back premiums for continuous coverage.

Questions about this provision can be directed to the Employer Communication Center at (608) 264-7900.