Health Insurance and the 60-Day Divorce Rule

By Jennifer Paine

Attorney, Cordell & Cordell

Read Related Article: Taking Advantage of COBRA During Your Divorce

Sixty days.

That may be all the time you have after your divorce to request healthcare insurance coverage through your ex-spouse’s plan.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives employees and their family members the right to continue group healthcare insurance coverage with the employer under certain circumstances, divorce being one of them.

If you’ve heard about COBRA from your ex’s employer, then there’s a good chance this 60-day rule applies to you.

COBRA requires that group plans sponsored by employers with at least 20 employees in the year immediately preceding the qualifying event, such as divorce, offer the employee and the employee’s family the opportunity to extend their coverage, which would otherwise terminate.

The extension varies depending on the qualifying event, but for divorce, the minimum period is 36 months.

The period begins from the date of the qualifying event and it may terminate early if:

  • you do not pay the premium;
  • the employer ceases to sponsor a group plan;
  • the employer goes out of business;
  • you obtain coverage with another group plan that does not contain any exclusions or limitations for pre-existing conditions; or
  • you become eligible for Medicare benefits.

However, COBRA coverage comes at a high cost. The plan can charge you up to 100% of the premium cost plus an additional 2% of the cost as a fee to administer the plan to you. If you are divorced and underemployed or unemployed, the cost could exceed your monthly income.

For example, a study from Families USA concluded that the national average monthly COBRA cost consumed 84% of the average monthly unemployment benefit and, in nine states, exceeded that benefit.

This is not to say you should avoid COBRA coverage altogether since you may qualify for federal assistance of up to 65% of the monthly premium. Be sure to contact your ex’s benefits office to determine whether you qualify.

You should contact the benefits office immediately and ideally, before your divorce. You will have only 60 days after your divorce to elect COBRA coverage.

There is a narrow exception that extends this coverage to 60 days after the employer gave you notice of the right to elect coverage, but this exception rarely applies. Most employers send form letters annually to notify employees of COBRA. You may have tossed this aside or filed it away without looking at it.

Within 14 days, the employer must provide you with materials to continue coverage, after which you will have 45 days to elect coverage. This is called the “election period.”

During the election period, you can sit and do nothing, in which case your right terminates. You can also elect coverage, which will be retroactive to the date of the qualifying event, or affirmatively waive coverage then change you mind with a written revocation, which will entitle you to coverage from the date of your revocation.

If you elect coverage, be prepared for a hefty bill. You must pay the premium within the first 45 days, and it could be for coverage retroactive to your qualifying event or more than 2 months prior.

Miss your 60-day notice period, and you could be foreclosed from continued coverage altogether. But if researched and noticed properly, you could have an extra three years of insurance and at a reduced rate.

As always, review your options thoroughly with an attorney and the benefits office. Cordell & Cordell has family law attorneys located nationwide.

Read Related Article: Taking Advantage of COBRA During Your Divorce

 

Jennifer M. Paine is an Associate Attorney in the Detroit, Michigan office of Cordell & Cordell. She is licensed to practice in Michigan, and has been admitted pro hac vice in Illinois, Ohio, and the United States Court of Federal Claims.

Ms. Paine received her BA in English and Mathematics from Albion College and graduated Summa Cum Laude. She received her Juris Doctorate from MSU College of Law and graduated Summa Cum Laude.

End of Content Icon

Leave a Reply

Your email address will not be published.