Married couples frequently get their health insurance through one of the spouse’s employers. So when a couple gets a divorce, does that mean insurance ends for the spouse who is relying on the other’s coverage?
The answer to this question can be found in the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA is a federal law that lets those who are covered by an employer-sponsored health insurance plan to continue coverage after a divorce, at their own expense.
COBRA applies only if the insurance plan is through a company that had at least 20 employees in the year prior to the divorce. Your former spouse is required to notify the plan administrator of the divorce within 60 days of the divorce judgment. Once notified, the employer has 14 days to provide you with the information you need to decide whether to continue insurance coverage through COBRA. You will then have 60 days to determine whether to accept the continued coverage – again, at your own expense. If you do not respond during that period, your coverage automatically ends.
COBRA coverage through an ex-spouse’s employer lasts up to three years. Coverage can be terminated prior to that for various reasons, including: 1) failure to pay the insurance premium, 2) the employer goes out of business, 3) the employer discontinues group insurance coverage, 4) you secure coverage through another group plan, or 5) you become eligible for Medicare.
One cautionary note about COBRA coverage: it is quite expensive. A COBRA plan can charge you up to 100 percent of the cost of the premiums, plus an administration fee (usually 2 percent). Depending on your situation, this cost alone may prohibit you from continuing coverage through your ex-spouse’s employer. You need to carefully weigh your options and decide whether you are willing and able to pay the cost of COBRA insurance after divorce. This is a critical financial decision that should be discussed with your attorney, financial advisor, or accountant.
If you elect not to purchase COBRA coverage, you have the following insurance options.
• Enroll in your own employer’s plan – If the place where you work offers health insurance coverage, then you should consider enrolling. The monthly cost of the plan will probably be more affordable than COBRA or an insurance plan you purchase on the open market. Because divorce is considered a qualifying event, you can enroll in your employer’s plan at any time.
• Purchase coverage in the marketplace – If you cannot enroll in your own employer-provided coverage, you will need to go into the marketplace and buy insurance. Divorce is a qualifying event that allows you to purchase coverage at any time.
It is important to determine how much of your post-divorce budget will go toward your health insurance, whether through COBRA, your own employer, or purchasing your own plan. If the divorce judgment provides that you receive spousal support (alimony), the cost of coverage can be factored into the support calculation.
Divorce is stressful. Health insurance issues can be complicated. And dealing with them both at the same time can be difficult. The experienced family law attorneys at Thacker Sleight, PC are here to help. Contact us today to schedule a consultation.