In today’s mini-episode, I wanted to talk about the subject of health insurance for adults. We will talk about health insurance for kids in a separate episode. But I wanted to cover what you should be thinking about if you are concerned about maintaining health insurance through your divorce.
Let me back up and say that if you have health insurance through your employer and if your spouse has health insurance through his or her employer, this is really not a topic that you need to worry about unless, for some reason, you anticipate losing your job and/or losing access to your current health insurance coverage. But suffice to say, if you are not insured through your spouse’s health insurance plan, there is no reason why the divorce itself should change your access to health insurance.
On the other hand, if you are insured through your spouse’s health insurance or you insure your spouse through your own health insurance, then you will want to address the subject of maintaining health insurance coverage in a bit more detail in your agreement.
What happens when you are divorcing and you are insured on your spouse’s plan, or vice-versa, they’re insured on your plan? First of all, there are a couple of different significant occurrences along the trajectory of getting divorced, and I want to speak to which of them should impact or could potentially impact your health insurance coverage, and you should pay attention to and which of them are far less likely to have any impact on health insurance.
First of all, physical separation of your households, generally speaking, this has no impact on your health insurance coverage if you’re legally married. You want to confirm all of this with your employer or your spouse’s employer, whichever employer is providing the health insurance coverage. Simply physically separating your households generally does not have any impact on spousal eligibility for health insurance through an employer.
Another important waypoint in your divorce process would be signing your divorce agreement, your separation agreement, or your settlement agreement. That also typically does not have any impact on your eligibility for health insurance coverage through a spouse’s employer, but you do want to confirm that because when you sign an agreement, in particular if you sign a separation agreement, you are legally separated. While still legally married, you are legally separated, and you do want to confirm that that does not change your eligibility in the eyes of your spouse’s employer, or vice-versa, to health insurance coverage.
Then another important waypoint in the divorce process is the filing of all of your divorce paperwork, the submission of your divorce to the court. You initiate the formal court case and you submit all of your completed paperwork and your agreement to the court. That as well generally does not have any bearing on or does not impede your access to health insurance coverage through a spouse’s employer. Again, confirm that with the appropriate human resources department, but simply filing for divorce does not change your marital status. You are still legally married and in the vast majority of cases, you are still eligible for coverage through a spouse’s health insurance plan.
The occurrence that in almost all cases is going to change eligibility for health insurance through a spouse is the issuance, the actual granting of your divorce. That happens when the judge signs your divorce. Most employers, the vast majority of employers are going to say that at that point, (a) you’re not a legal spouse, and (b) you’re not eligible for coverage as part of your ex-spouse’s current health insurance plan.
What happens then? What happens if you don’t have access to other coverage, or you do have access to other coverage but you want to continue being insured through the same health insurance plan? That’s where COBRA comes in. COBRA is essentially the federal law that gives you the right to continue being insured through the same health insurance plan but on a plan of your own, not through your ex-spouse. If you are insured through your ex’s employer or vice-verse, if he or she is insured through yours, your human resources department will be responsible for processing the removal of you or your spouse from your ex’s coverage and will also be responsible for initiating the COBRA application process, for ensuring that you or your spouse receive the appropriate documentation related to conveying to the insurer that you do want to continue on on your own plan via COBRA.
There are a series of administrative steps you need to take. Generally, you need to take those within, I believe, it’s 30 or 60 days of being removed from your prior health insurance. You need to indicate that you do want to opt into coverage through COBRA. You want to ensure that you are really on the same page and communicating with your spouse, so that the two of you can cooperate together and can be in touch with the appropriate employer to ensure a very smooth transition to COBRA because there is a timeline which is far from indefinite within which you need to complete that enrolment through COBRA coverage.
Finally, just a word on premiums. When you have health insurance that is offered by your employer, generally, the cost of that health insurance is heavily subsidized by the employer. What that means is that it is way cheaper for you to maintain a good level of coverage than it would be if you (a) were out on the open individual market, or (b) if you paid full freight for the full cost of the plan that you’re on. When you come off of the employer-sponsored health insurance plan and you enroll in your own plan through COBRA, you will be paying 100% of the cost of that plan. That often means an increase manyfold in the insurance premium. So before you make a decision about whether or not COBRA is the best option for you, you want to understand from the appropriate human resources department, what is the full cost of that plan for a single individual through COBRA, the unsubsidized premium cost of the particular plan that you have been on and thus that you will be entitled to continue on at full freight after the divorce.
The bottom line is that having access to COBRA coverage, is not a point of negotiation in divorce. It is something that, if you’ve been insured via a spouse’s plan, you are entitled to be insured through COBRA for three years following your divorce. However, the process of transitioning to COBRA coverage is one that requires cooperation between you and your spouse and coordination with the relevant employer to ensure that you can smoothly transition to COBRA coverage. It’s the kind of thing where you want to be sure to be communicating with your spouse and coordinating so that you can have a smooth transition, and you have totally uninterrupted health insurance coverage and don’t lose out on the opportunity to continue on generally a better quality plan if provided by a large group employer than you might otherwise have if you, say, went through the individual market for health insurance on your own.
That was our mini-episode on continuing health insurance coverage for adults through a divorce process. I hope it was helpful for you.