According to a study by the National Institutes of Health, there are approximately 1 million divorces per year. Of those divorces, roughly 115,000 women lose health insurance in the months following the divorce and 65,000 of those women remain uninsured. Furthermore, many of these women remain uninsured for 2 years or longer. Especially at risk are women who rely primarily on their spouse’s employer-sponsored health care plan.
For many spouses, losing health care coverage can be one of the more financially stressful changes in a divorce. For spouses who keep custody of minor children, this can be even more challenging. This article aims to help you better understand:
- How your health care might change after a divorce
- Post-divorce health care options that might be available to you
- Steps you should take to address health care coverage concerns
How Your Health Care Might Change After A Divorce
If each spouse has their own health care plan, a divorce might not change things much. However, in many families, one spouse might have an employer-sponsored health care plan which covers the entire family. If that is the case, then a divorce can change things quite a bit.
Employer-sponsored health care plans will usually allow an employee to maintain their own children on their health care plan, regardless of marital status. This usually is determined on a case-by-case basis according to applicable child support guidelines.
However, this does nothing for the ex-spouse’s health care. In most cases, ex-spouses are not covered under an employer-sponsored health care plan. This depends on many factors, so you will want to discuss this with your attorney to see what legal options exist in your particular situation.
Also, if you have children from a previous relationship, don’t expect those children to be provided for under your ex-spouse’s health care plan. Under amicable conditions, this might be a point of negotiation. In a more contentious divorce, expect your ex to put up a fight.
Post-Divorce Health Care Options
All is not lost, however. There are several options that might be available to you.
- Your employer’s insurance
Perhaps you already have a job that offers health benefits. If so, you shouldn’t have to wait until open enrollment. Divorce counts as a qualifying life event, which would allow you to enroll outside your employer’s open enrollment period.
Even if you don’t currently have a job, you could in the near future. You might choose to enter (or re-enter) the workforce after divorce, or economics might force that decision for you. Either way, employer-sponsored health insurance is a good benefit to look for. If you’re fortunate enough to have multiple job opportunities, don’t overlook the comparison between your employers’ health coverage.
Also known as the Consolidated Omnibus Budget Reconciliation Act of 1985, COBRA is the federal law that allows health care continuation in certain events. Specifically, COBRA requires that:
“Any group health plan offer qualified beneficiaries the opportunity to elect continuation coverage following certain events that would otherwise result in the loss of coverage (qualifying events).”
To clarify, a “group health plan” applies to employer-sponsored programs where the employer has 20 or more employees. In a divorce situation, ex-spouses are considered qualified beneficiaries, who are eligible for continuation coverage for up to 36 months.
There are a couple of catches. While you might be eligible for coverage, you will probably be responsible for the full cost of the plan. The law allows employers to charge up to 102% of the health care premium, with the additional 2% going to cover administrative costs. Also, COBRA eligibility only lasts for 36 months, so you might be on your own.
However, if you don’t have coverage, or you expect a gap in coverage (for example, the 90-day waiting period that you can expect from many companies when you take a new job), then COBRA might be a good temporary solution.
- Government employee health benefits
According to the 2012 Census of Governments, there were over 90,000 state and local governments (and one federal government), which employed 22 million people. If your spouse is (or was) a government employee, there might be different rules regarding health benefits. While COBRA rules apply to state and local governments (also known as public sector COBRA), you should take the time to understand your options.
For those whose spouses are (or were) military or federal employees, there are different rules that apply for TRICARE (for military) and the Federal Employees Health Benefits (FEHB) program. You can find more information about coverage for former spouses at:
- TRICARE: https://www.tricare.mil/Plans/Eligibility/FormerSpouses
- FEHB: https://www.opm.gov/healthcare-insurance/healthcare/eligibility/#url=Former-Spouses
Gray divorce is more prevalent than ever before. According to the Washington Post, the divorce rate for people 65 and older has tripled since 1990. With that in mind, you might be eligible for Medicare benefits, either on your own employment record or your ex-spouse’s record. According to the Social Security Administration, you might qualify for Medicare on your ex’s employment record if you meet the following conditions:
- Your marriage lasted 10 years or longer
- You are currently unmarried
- You are at least 62
- Your ex-spouse is entitled to Social Security Retirement or disability benefits
- The benefit you would receive based upon your work record is less than the benefit you would receive based upon your ex’s record
If you’re in a gray divorce situation, it might be worthwhile to look into Medicare, even if you don’t know whether you’re eligible.
- Health Care Exchange
While many people think of Obamacare as a last resort, it’s designed to be available when nothing else is. There is an open enrollment season for Affordable Care Act coverage. However, getting a divorce is a qualifying event that allows you to enroll outside the open enrollment period.
Going through the health care exchange also allows you to understand what tax credits might be available to you. These credits are based upon qualifying factors, such as income.
- Health Insurance Agent
If you have trouble navigating the different health care options (or finding health care options), you might turn to a health insurance agent. A health insurance agent might be able to help you find the right plan for your budget, income, and health situation.
If you’re concerned about finding an agent that you can trust, the health care exchange can help you find a health insurance agent in your area.
Steps You Can Take to Mitigate Post-Divorce Health Care Coverage Concerns
- Start early.
If you’re asking this question before you file for divorce, you’re more likely to get the information you need. If this question comes up after you’ve filed, or as you’re finalizing the agreement, then you’re already behind the eight-ball.
So get a better understanding of COBRA, if that’s a possible option. Start looking at the health care exchange, or talking to a local health insurance agent. You won’t get all the answers at once, but you can at least take some steps to better understand what health care might look like after your divorce.
- Do your homework.
Just because you ask the question doesn’t mean that people are going to come out of the woodwork with all the answers. The answers are out there—but you have to know where to look. And that means setting aside time to do the research.
If you haven’t discussed divorce yet, you might be fearful of tipping your hand. But even if you don’t ever get divorced, you should still understand what your current health care looks like. So you can at least start by becoming familiar with your current health care plan.
- Take the long view.
For those of you thinking about COBRA, that’s a nice option. But that’s only available for three years. What’s your plan after that? If you need to have coverage for a couple of years until you’re eligible for Medicare, then your plan needs to address your interim options.
Bottom line-Your plan needs to be good for the short-term AND the long-term.
- Capture the costs.
Don’t shortchange anything here. The purpose of capturing the costs is so that your lawyer has relevant information to negotiate on your behalf. While you might settle for a lower cost plan, you need to get the relevant information for the plan you feel is appropriate for your situation.
- Engage your attorney.
Once you’ve done your research, make sure your attorney knows everything, and that it’s captured in your financial affidavit. If you already put information into your financial affidavit, you can always update it with new, relevant information.
For example, let’s say that you put down the health insurance cost under your spouse’s plan when you initially filled out your affidavit. After you discovered your health care insurance costs under COBRA or another plan, it’s perfectly fine to update your affidavit! Otherwise, how is your attorney supposed to negotiate on your behalf?
- Make sure it’s in the agreement.
Once your divorce agreement is finalized, you’re likely stuck with the end result. Or, you’ll spend a lot of time and money trying to undo a perceived injustice. It’s much better to make sure that your agreement contains acceptable terms that allow you to obtain the health care insurance that you need in your post-divorce life.
While divorce is financially stressful, losing health insurance coverage can have lingering financial impacts long after the divorce is final. Obtaining health care is one of the most crucial steps you can take to financially protect yourself.
Lawrence Financial Planning is here for you when you need us most. We will always give you professional advice and walk with you every step of the way. We invite you to one of our monthly Divorce Workshops. Find the details on Facebook and Instagram, or visit our website.