Health Insurance Options Post-Divorce

By Jennifer M. Paine

Attorney, Cordell & Cordell

Two words are likely to strike dread in the pit of your stomach more than divorce – health insurance. Will you lose it? How can you afford it? Will your spouse have to pay for it? Will you have to pay for it? Who will pay for your children? And what if you are divorced and unemployed?

These questions are, for some of my clients, reasons to steer clear of divorce – why not remain unhappily married but healthy, rather than divorced and without health insurance?

But is staying married the right answer?

The best answer for each case depends on the facts and circumstances. However, for one reason or another, often the answer is no. If you are not earning as much as you did, now might be the time to divorce when your income is lower and you have less money to give as spousal support or child support.

If you lost your retirement savings in the stock market, why not divorce when you have less to share with your spouse? If every day you dread your spouse’s biting remarks, fights, over-spending, text messages to boyfriends or nagging ones to you, etc., and every day sucks the life out of you, or you and your children, why stay?

If health insurance is the thing holding you back, you really should have a discussion with your attorney. You may negotiate for your soon-to-be ex to pay your health insurance, and you may qualify for employer-provided, free or low cost insurance programs. You do have options! Here are the most common options:

 

COBRA

COBRA” is the acronym for the Consolidated Omnibus Reconciliation Act.   This was a federal overhaul of laws that included laws for private employers who provide group plan health insurance. The laws require the employer to continue to make health insurance available for employees and certain family members after the occurrence of a qualifying event. The continued health insurance is called “COBRA benefits” for short.

Not every employer needs to though. COBRA applies to group health plans for employers with 20 or more employees on more than one-half of the business days in the previous calendar year.

And not every loss of insurance triggers COBRA benefits. There must be a “qualifying event.” For the employee, this means a loss of the number of hours of work or voluntary or involuntary termination (for reasons other than gross misconduct). For the employee’s spouse or children, this means, in addition to the employee’s qualifying events, divorce or legal separation, the employee’s death or the employee becoming entitled to Medicare. Moreover, the employee must be enrolled in the group health plan when the qualifying event occurs, and that plan must continue to exist while you receive COBRA benefits.

If a qualifying event occurs, you must act quickly if you believe you or your children are entitled to COBRA benefits! The group health plan beneficiary must notify the plan administrator within 60 days of the qualifying event.

For example, if your spouse provides your health insurance through her employer’s group health plan and, as a result of your divorce, you will lose that health insurance coverage, you must notify the plan administrator of your divorce within 60 days of your divorce. The plan administrator has 14 days thereafter to send you an election form, which usually comes with supporting material about the plan’s costs and coverages, and you have 60 days to accept or reject the COBRA benefits. If you accept them, then you will have 45 days to pay your first premium.

The premium can be a hefty amount. Usually, unless the plan or the employer has contracted to accept less, the premium is the entire cost or up to 102% of the cost to provide the insurance to the employee. However, if your divorce occurred after Sept. 1, 2008, you may qualify for an additional federal benefit to help pay the cost under the American Recovery and Reinvestment Act of 2009, part of the federal stimulus package that saw extensions for unemployment benefits, reinvestment into infrastructure, loans to banks and the automotive industry, and help for those in a precarious position with health insurance, like divorcing families.

The federal government maintains a call center to answer COBRA questions.    For specific questions, contact your attorney and your or your spouse’s health insurance plan administrator. For general information, however, you may call a federal COBRA benefits adviser at 1-866-444-EBSA.

This is part 1 of a two-part series on health insurance and divorce. Part 2 reviewed the Medicaid and CHIP options, plus tips on what you should be doing before you get divorced. Click here to read.

 

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.

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