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Health Insurance and Divorce
How will my divorce impact my health insurance benefits?

A divorce causes major issues with health insurance benefits. Many families have an employer provided and/or paid for health insurance benefits that cover health insurance for the entire family. After a divorce, the spouse with the family health insurance coverage can no longer cover the other dependent spouse. They are no longer "family" members who can take advantage of the employer-based health insurance policy. There is no way around this unfortunate reality. If a couple gets divorced, then the dependent spouse will lose his or her health insurance coverage.

If both parties do not have adequate health insurance benefits available, and if the cost of obtaining COBRA benefits or an alternative health insurance policy is too costly, then there is one way to continue benefits without additional cost. That way is to enter into a separation agreement, but to delay filing for divorce. That way, the parties actually do remain married and they can stay on the same health insurance plan even though they are separated. The parties can consent to waiting for one, two or more years before either spouse files for a divorce. While the parties will remain married, their property, custody, and support issues will be addressed in their separation agreement. Under some circumstances, this is an optimal resolution.

Another option for divorcing couples is for the dependent spouse to obtain COBRA coverage. COBRA is a federal law which mandates that a person covered under a health insurance policy be given the right to continue that coverage, at their own cost, for a set time period if certain requirements exist. For example, if you obtain a divorce and if your spouse had family health insurance coverage through his employer, then the employer would have to provide COBRA coverage for you after the divorce. That COBRA coverage would require that you have the same health insurance policy, although your coverage would now be individual and not family. You would have to pay the employer's cost for that individual policy.

What are the different types of medical insurance available?
  • Employer-provided medical insurance - The best source for medical insurance today is your employer-provided plan because its cost is most likely subsidized by your employer. These medical plans are generally one of four types: indemnity plans, service provider plans, preferred provider plans or health maintenance organizations.
  • Individual medical insurance - Medical insurance policies are available directly from insurance companies for individuals. The advantage of this type of policy is that you may shop for the type of benefits you want. The disadvantage is you have to pay the whole cost of the policy premiums.
  • Medicare - Medicare provides mandatory basic hospitalization benefits for all U.S. citizens over the age of 65 under Part A coverage. Part B coverage is a voluntary program that provides coverage for doctor bills at a monthly cost to you. Medicare typically covers only half of the average senior citizen's health care bills. You can supplement it with Medigap insurance.

What is COBRA coverage?

COBRA is the federal law that entitles you to continued coverage in an employer's group health plan, even if you've become ineligible to participate because of job loss or divorce. If you were covered under your spouse's employer-sponsored health plan policy prior to your divorce or legal separation, then you should still be entitled to continued coverage under COBRA. However, the employer who sponsors the health plan no longer has to pay the premiums for this coverage. A divorced spouse must pay his or her own premiums to pay for COBRA.

The main advantage of applying for COBRA benefits is that it enables a divorced spouse to maintain his or her health insurance policy that their former spouse used to provide. If an employer-based health plan has good coverage then it may be advantageous to continue coverage on the policy. COBRA coverage lasts for 36 months. After the 36-month period expires, then the divorced spouse must obtain their own health insurance benefits. In some narrow circumstances, COBRA can be extended for an additional 18 months.

What are my health insurance options available after I am divorced?

There are many things to consider during divorce, and maintaining your health insurance coverage should be a priority. When a marriage ends, there are normally four good options that a divorced spouse can pursue to maintain health insurance coverage:

  • Continue the coverage offered through your ex-spouse's policy: The most common option is to apply for COBRA benefits. The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal mandated law that was designed to protect employees and their families from losing coverage as a direct result of divorce, death, job loss and other life circumstances. It really is a stopgap though because most people simply can't afford them! COBRA is very expensive. If your spouse maintains health insurance coverage through the company, and the company employs at least twenty (20) people, than you may continue your health insurance coverage for up to three years. However, the divorced spouse must pay for all of the premiums. Once you remarry or obtain coverage of your own, under another policy, the COBRA law will then terminate.
  • Get coverage through your current employer: Another option for a divorced spouse is to obtain their own health insurance through their own employer. If you are working and if your employer offers an affordable health then it is highly advisable to assess and compare the cost of COBRA versus the costs of participating in your employer's own health insurance plan.
  • Ask for health insurance coverage as part of the settlement: This may or may not work but it is definitely worth discussing with your lawyer. Many divorced wives focus solely on the amount and the length of their alimony payments. This can be short sighted. I always try to obtain a settlement wherein the ex-husband is legally responsible for paying for his divorced wife's COBRA payments. Alternatively, I try to obtain a settlement wherein the ex-husband is legally responsible for paying for any costs to obtain a new health insurance policy his ex-wife.

    The typical monthly cost for COBRA is about $650 to $750 per month. This fee is extremely high and it is quite a shock for most newly divorced wives. Therefore, it is always advisable to try to convince a court to require that a divorced husband must pay for the COBRA costs for the dependent spouse. In my opinion one of the most important parts of any divorce case is to insist that a divorced spouse must have her health insurance continued. In my assessment the continuation of maintaining health insurance is as equally as important as the amount and length of any alimony award.
  • Purchase an individual health benefits plan: In some or most cases, this may be your only or best option. Once again, you will have to pay the monthly fee on your own but you will be surprised as to what is available for the uninsured, ongoing medical condition person, and the under-insured.

There are various plans to choose from even though many want you to still believe there are only two options. Plans that place constraints on access to a hospital and physicians for a lower price and medical plans that offer ready access to hospitals and physicians for a higher price.

However, with the healthcare crisis comes another healthcare option and it is called "consumer driven healthcare." One benefit of the consumer driven healthcare alternative is that it puts the relationship back where it needs to be - into the hands of the patient and the physician.

There are tons of other benefits though, if you and your children are fairly healthy people and are not in and out of the hospital every week or month for example. The additional benefits can range anywhere from no deductibles, co-pays and waiting periods to being able to have ongoing conditions covered and being able to have all services under one umbrella per say like your ancillary, dental, prescription, vision etc.

A divorced spouse should know exactly how much it will cost him or her to obtain health insurance under a private health plan. This information should be disclosed to the court. The court will take into consideration the costs to obtain monthly health insurance when it determines the amount of spousal support.

Is there any time limit for a divorced spouse to apply for COBRA benefits?

Your spouse's employer is required to provide COBRA coverage for you, but only if you notify the health plan administrator within 60 days of becoming divorced. If you don't give the administrator proper notice, then you will not be eligible for COBRA coverage.

Can my husband still keep me on his employer's group health insurance plan after we are divorced?

No. Even if your spouse will be providing health insurance for the children, he or she cannot provide coverage for you through the employer's group plan, because you're no longer a member of his or her family. If your spouse has been providing coverage for you, and if your spouse's employer has more than 20 employees, you'll want to explore coverage under COBRA. COBRA is available for 36 months after divorce, and the coverage is equivalent to the coverage available to your spouse. Under certain narrow circumstances, a divorced spouse can apply to have COBRA continued for an additional 18 months.

What are the major problems with COBRA?

There are two problems with obtaining COBRA insurance coverage. The first is the cost of the coverage. COBRA coverage is considerably more expensive than the coverage available from most employers, because you'll have to pay 102% of the premium. The average price for the monthly COBRA premium ranges from $650 to $750 per month.

The second problem is the risk of becoming uninsurable. COBRA coverage will end by its own terms within 36 months after your divorce is effective. What happens if you're stricken with heart disease or cancer during that 36 months? You would then face the unpleasant prospect of searching for new medical insurance at the end of the 36 months with a most unappealing medical history.

Is there any possible way wherein I can "beat the system" and get divorced, but still stay on my ex-husband's health insurance policy?

The only possible way for a divorced spouse to remain on their husband's health insurance policy is to obtain a legal separation, or a divorce from bed and board. There really is no formal proceeding to have a legal separation in New Jersey. There is an outdated legal proceeding called a divorce from bed and board that is similar to a legal separation. Basically, a divorce from bed and board is a legal proceeding that is not really a divorce, but it is more than a legal separation. A divorce from bed and board is also called a limited divorce. Basically, a divorce from bed and board was very popular in the 50's and 60's. Many people believed that getting a divorce was a mortal sin, and that they would go straight to hell. These kinds of beliefs were especially prevalent for people of the Catholic faith.

To address these concerns the courts developed a legal proceeding called a divorce from bed and board. In this type of legal proceeding, the parties are economically divorced, but they are still legally married. The parties will receive a judgment that equitably distributes their assets, support awards will be issued, and any marital debts will be apportioned. A limited divorce has all of the same attributes of an absolute divorce except the parties can't remarry.

The benefits of having a divorce from bed and board are that a dependent spouse can still receive health insurance benefits from the other spouse's health plan because there is not a complete divorce. In my experience, retaining the health benefits are the primary reason why a couple may choose to pursue a divorce from bed and board. In many cases, it is impossible for a divorced wife to obtain affordable health insurance benefits after a divorce. Therefore, if a wife has a health condition, then it is imperative that she is able to maintain adequate health insurance. In my assessment, if there is a long term marriage, then a divorce from bed and board can enable a wife to retain her health insurance coverage. If a spouse is still able to stay on the health insurance after a separation, then this can assist the family from paying oppressive COBRA payments, or from paying for a new highly priced health insurance policy.

In summary, a divorce from bed and board is a legal proceeding that is essentially half way between a legal separation and a full divorce. This type of legal proceeding should only be pursued if the parties are still acting civil to each other. Moreover, this type of legal proceeding is really only applicable to a very long term marriage, wherein no person has any intentions to remarry.

The drawbacks of a divorce from bed and board are that the parties are still technically married. Neither spouse can remarry if there is only a divorce from bed and board. Therefore, it may be impossible for the spouses to date other people. Even though the spouses are economically divorced, they still are technically married to each other. It is no fun to date a married person no matter how you look at! Moreover, many spouses still may attempt to exert control over the other spouse because they are still technically married.

Finally, if a divorce from bed board is obtained, then either spouse is permitted to file an application with the court to convert it to an absolute divorce. An absolute divorce is a full divorce and both parties are free to remarry. Unfortunately, if an absolute divorce is entered, then the dependent spouse will then lose his or her health benefits. Once the family unit is officially terminated, then any employer-based health plan is no longer legally obligated to provide coverage to a dependent spouse. If there is only a divorce from bed and board this is an ideal maneuver to avoid this potential catastrophe.

In summary, understanding the full range of complexities of a divorce from bed and board can be very complicated. It may take several meetings with an experienced lawyer to fully understand the pros and cons that a limited divorce has to offer. However, if a dependent spouse suffers from a severe medical condition(s), and if maintaining health insurance is a "life or death" issue, then it is worth serious consideration.

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