In Revenue Ruling 2002-88 , the IRS says an analysis of Section 4980B of the Internal Revenue Code found if the qualified beneficiary – a spouse who would otherwise lose their coverage under the plan as a result of a divorce or legal separation – is the spouse of a covered employee on the day before a divorce or legal separation, then the plan has the obligation to make COBRA continuation coverage available to a qualified beneficiary for 36 months after the date of the divorce.
This obligation can end earlier for a variety of reasons, such as failure to make timely payment to the plan for the qualified beneficiary’s coverage.
However, a group health plan is not required to offer COBRA to the qualified beneficiary if notice of the event is not provided to the plan administrator within 60 days after the later of the date of the divorce or legal separation or the date the qualified beneficiary would lose coverage on of the event.
Those plans subject to Section 4980B would have an excise tax imposed upon them if they fail to comply with the COBRA requirements.
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