According to a 2013 study published by the University of Michigan, around 115,000 women lose their private health insurance coverage after they are divorced. In many cases, these women are not able to get replacement coverage. Divorced women often face multiple obstacles to obtaining health insurance coverage. They may not be able to afford the employer-sponsored premiums or have been homemakers who have not worked outside the home. Many divorced women are eligible for COBRA health insurance coverage, but there are drawbacks. COBRA coverage is generally limited to 36 months and can be very expensive.
Legal separation to preserve coverage
In some cases, couples choose a legal separation rather than a divorce because health insurance can be very expensive, especially for someone with a pre-existing condition. Some health insurance companies will provide coverage for a spouse who is legally separated and others do not. Couples who are thinking about legal separation should research whether or not the coverage can be continued post-separation.
Couples who get divorced or legally separated are required to report this change of status to their health insurance carrier within a specific time frame. Individuals who do not properly notify their insurance company regarding a recent change in marital status might be charged with insurance fraud.
Coverage for children in divorce
An important part of the settlement agreement process is figuring out who will be responsible for the children’s insurance coverage. The children might be covered under one parent’s employer’s plan or through a private insurer. Premium payments may be covered by one parent or shared by both in proportion to each parent’s income. Additionally, the parents will need to decide who will be responsible to pay out-of-pocket medical expenses such as deductibles, co-payments and prescriptions.
How COBRA works
If one spouse works for a company with 20 or more employees, the other spouse will be eligible to apply for ongoing coverage in the employer’s plan according to the Consolidated Omnibus Budget Reconciliation Act.
Those whose former spouses work at smaller companies may qualify for coverage under state mini-COBRA laws. The only states that do not have mini-COBRA laws are Washington, Virginia, Pennsylvania, Montana, Michigan, Indiana, Idaho, Delaware, Arizona and Alaska.
Employers are required by law to provide coverage for an employee’s ex-spouse; however, the ex-spouse is required to notify the health plan administrator within 60 days of a divorce. The ex-spouse will not be eligible for COBRA coverage if the notice is not given.
Explore coverage options with current employer
An ex-spouse may have the option to gain health insurance through his or her employer. COBRA is often very expensive since the payment is usually between 100 and 102 percent of the premium cost. If an employer offers coverage that is no-cost or low-cost, that may be a preferable option. Another option might be private insurance plans. Some of these may be more affordable and can be set up long-term.
Post-divorce and the Affordable Care Act
Under the Affordable Care Act, health care costs will decrease for some people, including those who have gone through divorce. Under the ACA, insurance carriers will not be able to charge higher premiums or deny coverage to individuals with pre-existing conditions.
According to some divorce attorneys, concerns about health care coverage have caused some older people to delay their divorces until they are 65 so that they will be eligible for Medicare. The ACA will free these individuals up to seek a divorce without fear about losing their health care coverage.
Health care coverage and alimony
It is a good idea to deal with insurance coverage early during the divorce negotiations. The cost of health care is an important factor to consider during divorce negotiations. Under the ACA, it may be easier for couples to figure out costs for individual coverage once the divorce is finalized. Subsidies in the form of a tax credit are available for individuals through the ACA and those will need to be factored into calculations for spousal support. In addition, many states are planning to expand their Medicaid programs under the ACA.
Other health care considerations in divorce
Divorce attorneys advise spouses to obtain a temporary court order to make certain that all insurance premiums will continue to be paid during the divorce. This includes long-term care insurance, life insurance and health insurance.
When older spouses divorce, they lose the future care giving that one may have provided the other. In some cases, it may be worthwhile to quantify the cost of future care giving. Ex-spouses are encouraged to purchase long-term care insurance. In the event that a couple already has joint long-term-care insurance, they will need to negotiate what will happen to the insurance as part of the divorce. In most cases, a new person will need to be named under a health care power of attorney if the soon-to-be former spouse had that power previously.
It is clear that divorce complicates matters such as health insurance. There are many factors to consider and negotiate. A divorce lawyer may be able to help couples navigate the complex and often confusing world of health insurance during and after a divorce or legal separation.