When you and your spouse decide to end your marriage, you must address questions related to maintaining health coverage for yourselves and your children. This guide will help you to understand the implications of divorce on health insurance and how to ensure continuous coverage during this transition.
Health Insurance Coverage During Divorce
If you or your spouse are employed and have health insurance through your employment which covers both spouses and your children, a divorce can affect the ability of your spouse to remain on your employer-sponsored insurance plan. While the divorce process is ongoing and you are still legally married, your spouse can remain on your health insurance as a dependent. In fact, if the initial divorce pleadings have been filed, you are restrained from making any changes to the health insurance coverage without the prior agreement of your spouse or a prior order from a judge allowing you to make changes to insurance coverage. However, once the divorce is finalized, your spouse is no longer eligible for dependent coverage under your plan.
The Risks of Dropping Coverage
You should carefully consider the timing of any changes to health insurance. During the divorce process, if you or your spouse were to suffer a catastrophic illness or accident and lacked insurance coverage, your joint assets could be at risk of being used to cover medical expenses. Therefore, maintaining health insurance coverage for both spouses until the divorce is finalized is a prudent choice.
Costs and Payment Arrangements
Health insurance can be expensive, especially when adding coverage for a dependent spouse. If you or your spouse has access to employer-sponsored health insurance, it may be more cost-effective for the dependent spouse to enroll in their own plan during the next open enrollment period. These periods usually occur toward the end of the year, though some employers may have different open enrollmet windows.
Until the open enrollment window, you both should agree on how to pay the cost of health insurance. Often, the couple agrees to maintain the same arrangement they had before separation, commonly that the employee spouse pays the cost of dependent coverage for their soon-to-be-ex and eligible children. Alternatively, the non-employee spouse might contribute to the cost of their dependent insurance coverage. It is important to remember that any reimbursements from one spouse to the other should consider tax implications, as health insurance premiums are typically paid with pre-tax dollars.
Life-Changing Events and Open Enrollment
Divorce is a life-changing event, which allows you to enroll in a new health insurance plan, whether through an employer or a private plan, outside of the standard open enrollment period. This flexibility ensures that you can secure health coverage immediately after the divorce is finalized, regardless of the time of year.
COBRA Coverage
In cases where a spouse loses coverage due to divorce, the federal law known as COBRA (Consolidated Omnibus Budget Reconciliation Act) allows you to continue coverage under your ex-spouse’s employer-sponsored health plan for a limited period. COBRA coverage can be expensive because the ex-spouse must pay the full premium, the portion paid by the employer and the employee co-pay, plus a small administrative fee. However, it can be an option for maintaining continuity of care, especially if ongoing medical treatment is needed. There is a timeline within which the COBRA application must be submitted, and if that timeline has expired, the non-employee spouse is no longer eligible for COBRA coverage.
Children’s Health Insurance
When it comes to your children, California law requires you, as their parents, to provide health insurance if it’s available at a reasonable or no cost, through an employer-sponsored plan. If neither you nor your co-parent has access to such a plan, you should discuss alternative ways to secure health coverage for your children, given the high cost of healthcare.
Self-Employed and Private Policies
For those who are self-employed or have private health insurance policies, the situation is different. Upon divorce, the dependent spouse will need to find new coverage, often through the Affordable Care Act (ACA) marketplace or other private insurance options. COBRA is not available for private policies.
Divorce complicates many aspects of life, including health insurance. It’s important to understand your options, plan for continuous coverage, and ensure that you and your children are protected during and after the divorce process. Consult with a legal or financial advisor to work through this complex issue effectively.
Lisa R. Murray is an experienced attorney specializing in Collaborative Divorce and Mediation. She can help you determine the goals for your divorce and your post-divorce life. She can be reached at 650-642-3897.