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Most plan trustees and plan professionals know of a Qualified Domestic Relations Order (“QDRO”), which is a court order that splits retirement benefits between the plan participant and his or her ex-spouse or minor child after a divorce. A QDRO, however, can also apply to welfare plans. This happens most often when the QDRO specifies that the proceeds of a life insurance policy will go to the ex-spouse or minor child.
Plan professionals of welfare plans in the Sixth Circuit should remain especially vigilant when reviewing QDROs, as courts in the circuit are lenient when analyzing if the QDRO contains the necessary elements. For example, ERISA requires that each QDRO must “clearly specif[y] each plan to which such order applies.” Most of the time, this means the QDRO identifies a pension plan by name. In the context of life insurance benefits, however, courts in the Sixth Circuit have found that phrases such as “all employer provided life insurance” and “all life insurance policies” sufficiently identify the plan, and therefore the QDRO is valid.
While most QDROs put the onus on the participant to change his or her beneficiary, plans should be aware if there is a discrepancy between the QDRO and the listed beneficiary. If the life insurance benefit is an insured benefit, plan professionals should work with the insurer to inform them of the QDRO.