This is the complete guide to understanding your health insurance options during and after divorce.
It goes without saying that determining how to handle health insurance coverage for you and your children is absolutely critical. There’s a myriad of choices and it can all be very confusing to sort through.
That’s why we put this comprehensive resource together – to try to make things just a little bit easier for you during this challenging transition.
Quick Tips:
Continuing health insurance after divorce will depend on your situation.
You have many options when it comes to health insurance. Here are a few of the more common ones:
One of the things I get asked about all time is what’s the difference between an HMO, PPO, and POS.
Here’s a quick overview:
State laws may also come into play. For example, in some states, it is illegal for a spouse to drop the other person from healthcare coverage while a divorce is in progress.
Other states view legal separation as the same as divorce, and a spouse may be dropped from coverage just as they would if they were divorced.
In all cases following a divorce, an employer will no longer cover a spouse under an employee’s healthcare policy.
However, a spouse does have rights under COBRA to continue coverage. A spouse will have 60 days to notify the employee’s health plan administrator that they would like to continue coverage. They will be able to do so as long as they pay the healthcare plan premium.
Also, during a divorce, temporary orders by the court may mandate that a spouse continue to provide health insurance until a divorce is finalized.
If a spouse violates that order and drops a spouse anyway, the spouse that loses coverage can file a petition for a violation of the court order. The spouse will be required to add the person back on to the policy and incur any additional costs to do so.
There are many possible scenarios, but the bottom line is that you do have certain rights that you can exercise.
If you’re heading for divorce, you should take time to understand these rights and make them an integral part of the divorce process.
Federal law dictates that health insurance coverage ends as soon as you are divorced.
However, most insurance plans allow an ex-spouse to get health insurance through COBRA for up to 36 months following a divorce.
To qualify, a spouse’s company must employ at least 20 people, and insurance must already be offered as a benefit through the employer.
If your spouse works at an employer with less than 20 employees, a mini-COBRA plan may be available.
The primary drawback is that COBRA premiums can be expensive, and it may be wise to look elsewhere for coverage.
Health insurance companies have stringent rules about when and how they must be notified following a couple’s divorce.
Failing to do so correctly and timely could constitute insurance fraud.
In divorces where children are involved, health insurance coverage will generally not be affected by the parents’ divorce.
A judge will determine which parent is responsible for providing coverage and paying premiums. Most of the time, this is the parent that provides child support, especially if they have access to better healthcare.
When your spouse is the one providing healthcare during the marriage for a spouse and family members, one of the most unsettling things a spouse may have to face is the prospect of getting coverage.
New coverage will probably mean some degree of disruption unless existing healthcare coverage is part of a divorce settlement. There are options available for coverage you can pursue if you are in need.
In a best-case scenario, your ex would allow you to stay on their healthcare plan until open enrollment periods roll around again. This makes getting healthcare insurance much easier.
In a contentious divorce, a spouse may choose to drop you from his or her company healthcare plan as soon as possible.
If you are not in an amicable divorce, you should take immediate steps to research your coverage possibilities.
Here are some options to explore:
If a spouse works at a company with 20 or more people, then Federal law mandates that a divorcing spouse is eligible to apply for coverage under the employer’s plan.
This law is known as the Consolidated Omnibus Budget Reconciliation Act or COBRA.
If an employer has less than 20 employees, a spouse may still be able to continue coverage under state-specific mini-COBRA laws. The exception to this is in individual states where the mini-COBRA laws are not in place.
You have 60 days from the time you are divorced to request coverage from the health plan administrator, or you will not be eligible for coverage.
If you are employed and your employer offers healthcare coverage as a benefit, then you should explore this as a possibility as well.
Most companies offer open enrollment periods at one time or another throughout the year. However, divorce is considered a significant life event, and enrollment in healthcare can generally take place at any time of the year under these circumstances.
If you do not have access to employer healthcare coverage through either your spouse or your employer, you are eligible for coverage under the ACA (Obamacare).
You can shop for various plans on your state exchange, the federal marketplace, or in the private marketplace.
Because divorce is considered a qualifying life event, you will have 60 days after your divorce to get coverage during a special enrollment period.
Qualifying life events can also include getting married, having a baby, adopting a child, the death of a member of the household, moving your residence, having COBRA expire, a change in income resulting in no longer qualifying for Medicaid, being released from jail, or a discharge from the armed services.
If the 60 days lapse, you will have to wait until the regular open enrollment period takes place to sign up for a healthcare plan.
Open enrollment typically takes place in November and December each year.
If you need health insurance to bridge a short lapse in coverage because you will either get coverage through an employer or Obamacare, then a short-term policy may be the best way to go.
Coverage can start in as little as 24 hours and can last for up to 6 to 12 months, depending on the state where you live.
Because coverage takes place so quickly, you cannot have certain pre-existing conditions.
Also, you will have the option of seeing the doctor of your choice, or you can save money by choosing to go to doctors who participate in discount networks.
Because there are so many choices and options to consider, shopping for healthcare insurance under the Affordable Care Act (aka Obamacare) may seem a bit overwhelming at first.
However, if you take things logically, and apply your circumstances to the process of deciding what is best for you, it’s possible to come up with the healthcare plan that is best for you.
Here are some things to consider as you work through the Obamacare process.
Metal Tiers. One of the first things you’ll encounter when shopping for an ACA plan is that Metal Levels sort offerings.
Bronze, Silver, Gold, and Platinum tiers help you to decide what the cost split is between you and your insurer.
Typically, the greater the insurer’s split is, the more the plan will cost.
When comparing plans and tiers, you need to consider if you have an ongoing medical condition that will require more frequent care or if you will only use a plan sporadically.
For more ongoing care, it may make sense to buy a plan with a lower deductible and lower copayments.
If you only use healthcare coverage from time to time, a plan with cheaper monthly premiums could be the preferred way to go.
Budget and Price. You will need to decide how much of your budget can be allotted to health insurance costs and then make sure you can afford to make those payments.
In some divorce settlements, this is one of the things to ask for if you are seeking spousal support.
You may need to adjust the level of your plan either up or down so that it can accommodate your spending plan.
This will require trying to anticipate your healthcare costs and what the corresponding deductibles may be.
As part of this, you should investigate whether or not you are eligible for subsidies under ACA. The savings can be substantial.
Without a doubt, this can get tricky, and you should not penalize yourself if it takes a year or two to zero in on what is best for you.
In-Network or Not. If you have been going to a particular healthcare provider for some time, then you may want to retain that continuity, especially if children are involved.
If this is an important consideration, be sure to ask up front if your provider is in the health insurance company network of the plan you may want to purchase.
The Fine Print. After you have narrowed down your choices, make sure you get down into the details of the plan to make sure you have a complete understanding of what is covered.
Read the Summary of Benefits.
Some plans will be stronger on certain coverages than others.
Now is the time to do your due diligence, not after you buy a plan.
Sometimes the information is easy to find and at other times, not so easy.
That alone might be a red flag if you are considering coverage by a particular vendor.
One other crucial thing to take note of is knowing the exact date when your coverage will kick in.
Here are several things you should know about the Consolidated Omnibus Budget Reconciliation Act (COBRA).
COBRA is a Federal law that will allow you to continue with the same health insurance you have been receiving through your spouse’s employer. You must agree as long as you agree to step in and pay the premiums.
Your spouse’s employer must have at least 20 employers and already have a health insurance plan in place.
If an employer has less than 20 employees, you may qualify for a mini-COBRA plan under the laws of your state.
Most states have mini-COBRA in place, except Alabama, Alaska, Arizona, Delaware, Idaho, Indiana, Michigan, Montana, Pennsylvania, Virginia, and Washington.
State mini-COBRA terms can be quite different from those provided by the standard federal COBRA, so you must research terms and conditions.
Your spouse’s employer must provide coverage for you, but you must notify the plan administrator within 60 days after you are divorced.
If you don’t comply with this requirement, you will not be eligible for COBRA coverage.
While COBRA coverage is an option, it does come with a downside.
Under COBRA, you are responsible for the entire healthcare premium, which will not include any amounts that an employer pays on behalf of an employee.
In some instances, you are charged 102% of the cost of the group rate.
You will want to compare costs, but you may find that other options are much more affordable than COBRA coverage.
The other limitation with COBRA is that coverage ends in 36 months. You will need to have new coverage in place within three years if you go with a COBRA option.
If you are married, you are generally eligible for premium-free Part A Medicare through either your work history or your spouse’s work history. You must have paid Medicare taxes for at least 40 quarters of your working life.
When you get a divorce, you may have options for Medicare benefits depending on your situation and your ex-spouse’s situation.
According to the Social Security Administration, you can use your ex-spouse’s employment history after a divorce if you meet the following conditions:
If all of those conditions apply, you may be entitled to premium-free Part A and Part B coverage. This will be with the same premium that all enrollees must pay for Part B coverage.
If you or your ex-spouse do not meet the eligibility requirements for Medicare, you may still be able to purchase Part A after paying the applicable premium.
Anyone eligible for Medicare Part A and B can enroll in Medicare Part D prescription drug coverage or Medicare Advantage Part C. The only caveat is that you as long as they live in an area serviced by the plan.
A spouse going through a divorce who can’t afford healthcare insurance might consider applying for Medicaid.
It is a need-based federal program administered at the state level that provides health coverage for low-income families.
Contact the state Medicaid offices in your state to see if you qualify for benefits.
When planning for retirement, many couples realize they may make too much each month to qualify for nursing home assistance.
To get around this, some couples resort to what is known as a “Medicaid divorce.” This is a planning tool that helps reduce the overall amount of assets a couple has in their name. It helps each spouse qualify for Medicaid without losing a substantial amount of their assets.
Currently, Medicare does not cover the costs of long-term care. Medicaid assistance is necessary for many families who cannot afford the staggering costs of a nursing home.
Medicaid eligibility requires that a family spend down their assets to the point of poverty before Medicaid assistance may become available.
To get around this, in a Medicaid divorce, one spouse will offer nearly all of the couple’s assets to the other in a divorce settlement. A spouse can then apply for Medicaid benefits without having to report assets on a Medicaid application.
There are several possible implications in doing this that can have impacts on other benefits.
It is best to consult an elder law attorney before considering a possible Medicaid divorce.
Some states prohibit divorce while a spouse is pregnant. Other states will allow a person to file for divorce while pregnant but will not allow the divorce to be finalized until after the baby is born.
In most states, the father of the pregnant spouse is the husband unless established through paternity testing. Other states will consider the unborn child to be the husband’s legally, even if the biological father is someone else.
As you can see, it can be quite confusing and complicated.
All of these factors can have an impact on who is responsible for health insurance while a woman is pregnant and getting a divorce.
During pregnancy, a court may order that a spouse contributes to healthcare costs until the birth of the child.
After the birth of the child, costs for healthcare can be factored into child support and custody issues.
If there are any disagreements regarding who is responsible for healthcare during pregnancy, it is best to consult an attorney and seek direction from the courts.
Do not assume you are responsible for paying healthcare insurance costs just because you have retained primary custody of a child after divorce.
Healthcare costs can be high, and it is advisable to make this issue a part of any settlement discussions between the primary and non-primary spouse.
Courts will look at many factors when deciding the issue, including income, existing healthcare that is in place and costs to provide healthcare for any minor children going forward.
It is often a negotiable expense and is treated as such. Here are some issues to consider:
A stepchild is eligible to be covered under a new spouse’s healthcare plan.
If coverage provides benefits for children, federal law states that an employee must be given at least 30 days to enroll a new dependent. Some employers may be much more generous with an enrollment period.
A biological child, adopted child, stepchild or foster child can be eligible to be a part of a new spouse’s healthcare plan up to age 26.
The following chart will give you a quick overview of how your taxes can be impacted when it comes to healthcare costs. In all cases, it’s best to work with your tax professional to get accurate answers for your situation.
Depending on your situation, start with one or more of these resources:
Private or Local Resources
You should also check the plan documents or benefit summary for your spouse’s current employer to understand the COBRA options. If you’re working cooperatively, just ask your spouse to contact the HR Department to obtain this information.
Then, you can work with a health insurance broker to explore private health insurance options and get any questions answered.
Here are some additional questions and answers to many common health insurance and divorce issues. Click the link to jump to the answer to that question.
Healthcare costs have consistently risen at a pace that far exceeds inflation in recent years. Because healthcare costs can dramatically increase as people get older, it’s little surprise that healthcare costs are a significant concern for boomers.
Medicare and Medicaid are two separate, government-run programs. They are operated and funded by different parts of the government and for the most part, serve different groups.
Medicare is a federal program that provides health coverage if you are 65+ or under 65 and have a disability. The amount of your income does not matter as long as you have paid into Medicare for the requisite amount of time.
Medicaid is a state and federal program that provides health coverage if you have a very low income. You can be eligible at any age if you meet qualifications.
If you are eligible for both Medicare and Medicaid (dually eligible), you can have both. They will work together to provide you with health coverage and lower your costs.
Extremely so due to premium sharing with the federal government. Costs are funded through Medicare taxes deducted from workers’ wages and self-employment income. It covers anywhere from 77% to 99% of the actual costs.
Part A covers hospital expenses, skilled nursing facilities, and so forth. It is covered 100% by the government.
Part B covers outpatient services, doctor services, and related costs. It is not free, but those who enroll pay a premium that is equal to only 25% of the cost of Part B. In 2019, that amount is $135.50 per month, per person. Higher-income individuals could pay more through IRMAA rules.
Part D is prescription drug coverage. Costs vary depending on what plan you choose, but in 2019, the average cost is about $32.50 per month.
All of these costs do not take into account some deductibles and co-pays that will need to be met.
The current threshold for Income-Related Monthly Adjustment Amounts kicks in once a Single Filer’s modified adjusted gross income (MAGI) exceeds $85,000. It is double that amount or $170,000 for Joint Filers.
You are eligible to enroll in Medicare when you reach 65 or have a qualifying disability. As you approach 65, you will be able to enroll during a 7-month “Initial Enrollment Period” that begins at the start of the month three months before the month you turn 65 and ends at the end of the month three months after the month you turn 65.
You will have no trouble finding healthcare professionals who accept Medicare. That’s because more than 90% of non-pediatric primary care physicians accept Medicare.
When the qualified beneficiary (the employee separating from service, the employee’s spouse, or the employee’s child) has been certified by the Social Security Administration by the 60th day of COBRA coverage, an additional 11-month extension is added. This only applies to people who are only eligible for 18 months of COBRA coverage.
The employer must offer COBRA coverage for a minimum of 18 months (employers, at their discretion, can offer continuation coverage for longer than required by COBRA).
One drawback when extending coverage is that when an individual elects COBRA continuation coverage, they become responsible for the full cost of the policy. Employers are allowed to charge an additional 2% administration fee, bringing the total cost of the policy to 102% of the actual premium.
But this amount may be increased to 50% – making the total COBRA cost 150% of the policy premium – during the additional 11 months when COBRA coverage is provided due to a former worker’s disability.
COBRA rules only apply to employers with 20 or more persons, but many states have similar requirements known as “Mini-COBRA” laws. Employees separating from service from smaller employers should check to see what options are available to them under their state law. These rules can vary widely from state to state.
Under Federal law, the only five factors insurance companies can use when establishing premiums are:
Since 2014, the Affordable Care Act requires that all major medical insurance policies are issued on a guaranteed basis. A person cannot be denied coverage for a pre-existing condition.
That means people can transition from employer-provided health insurance to a private insurance plan on an insurance exchange, regardless of any health conditions.
The catch is that while a person can’t be denied coverage for a pre-existing medical condition, they cannot simply purchase coverage on an exchange whenever they want. Instead, coverage can only be purchased during an enrollment period.
If coverage is not purchased during the enrollment period, it is generally necessary to wait until the next Open Enrollment Period that runs from the beginning of November to mid-December each year. Coverage takes effect at the beginning of the subsequent year.
In some states, health insurance for early retirees is dramatically cheaper than the national average, due to Community Ratings. Most states allow insurers to charge more to provide health insurance to an older person than to a younger person.
In states where it is employed, insurers are required to use the Community Rating. It states all persons in a geographic area are charged the same for the same insurance, regardless of their age.
One of these places is New York City. It is an area with one of the highest costs of living in the country. The average monthly premium paid by a 64-year-old individual purchasing a Silver Plan in 2019 is just $585. But that $585 premium is exactly the same premium that would be paid by a 24-year-old individual also living in New York City.
There are a couple of things you might consider discussing with your spouse.
First, you can remain on your spouse’s health insurance while you’re separated (living apart) since you’re still married.
Legal separation is a whole different issue. As a general rule, most insurance carriers do not allow you to stay on your spouse’s health insurance plan once there has been a judgment of legal separation.
That’s not always the case though – so be sure to check with your employer.
Another option is a complaint for a limited divorce, a form of a legal separation. It resolves issues similar to a regular divorce, but neither spouse could re-marry unless they applied to have this converted to a judgment of divorce.
A limited divorce is sometimes appropriate for religious purposes. When a limited divorce is granted, a court can order spousal and child support, award use and possession of the family home and certain types of personal property.
As rules tighten, there is an increasing number of insurance providers who are considering limited divorces in the same category as a judgment of divorce.
Check with an attorney or your medical insurance provider before going with this option.
Yes. To qualify for Medicare, you must work at least ten years by age 65. If you do not have ten years of work history, but you were married for at least ten years to someone who does qualify for Medicare, you may still qualify through your former spouse’s benefits.
Some conditions that must be met for qualification:
You are not obligated to continue insurance for your spouse unless you’ve been ordered by a court to do so. If you stop it, your spouse could go to court and ask that it be continued and the judge would have to decide at that point if you are responsible for it.
File a petition for a violation of the order with the court. Your spouse will be required to put you back on and be responsible for any costs you incurred because of the removal.
Copays and deductibles are paid to the individual doctors, not the insurance company. The adult who has incurred them is responsible.
Absolutely. You can negotiate it as part of your divorce settlement agreement. Courts are aware of the importance of healthcare coverage, especially if a spouse has stayed at home during the marriage, and may make accommodations to ensure continued coverage is built into a settlement.
The fact that the baby is not his does not affect your right to be covered by his insurance. You should be able to stay on the insurance and get medical treatment. You can continue with coverage through COBRA after the baby is born, and your divorce is finalized.
Possibly. You can try to do so, but a court might order you to continue it. Instead, consider asking your spouse to pay you the difference between a single policy and a family policy.
No, your spouse’s attorney does not get to dictate terms to you. Only the court can determine what needs to be done.
You can go to court and seek a modification in the terms that were put forth in your settlement. Be prepared to thoroughly document why you are not able to meet the original terms, or you may be found in contempt of court.
You may also be able to tap into state-sponsored health insurance for your children. It is often offered with billing on a sliding scale based on your ability to pay.
You can go to the court and ask for a modification based on your new job circumstances, especially if you aren’t given any choice by your employer.
No. The father of the child would be responsible for assisting with healthcare coverage.
Laws vary by state, but generally, it is either until a child turns 18, graduates from high school if they are older than 18, or until they turn 21. Provisions in a final divorce decree may also provide other modifications, such as providing coverage for as long as a child is in college.
Courts are always concerned with making choices for children that are in their best interests. If it is demonstrated that the child will be at a higher risk, there’s a good chance the court will insist that the coverage stays the same.
You can ask the court for a modification, but the new mate is not a party to your divorce, so the court probably will not allow the change to proceed.
You and your spouse could be liable for fraud and charged accordingly.
Under the Civil Service Retirement Spouse Equity Act of 1984, certain former spouses of current and former federal employees may qualify to enroll in a health benefits plan under the Federal Employees Health Benefits (FEHB) Program.
A former spouse is eligible if that person:
Former spouses must pay the full premium for FEHB coverage (i.e., the former spouse must pay both the employee and government shares of the premium cost).
Looking for more tips on divorce and your money? Here are a few of our favorite resources:
Jason Crowley is a divorce financial strategist, personal finance expert, and entrepreneur. Jason is the managing partner of Divorce Capital Planning, co-founder of Divorce Mortgage Advisors, and founder of Survive Divorce. A leading authority in divorce finance, Jason has been featured in the Wall Street Journal, Forbes, and other media outlets. He is a Chartered Financial Analyst, Certified Financial Planner practitioner, and Certified Divorce Financial Analyst. You can email him at jason@survivedivorce.com.
A list of the tools and resources that can help you have an easier, cheaper divorce.
Download our free ebook with 100+ financial landmines to avoid. You’ll also get weekly tips and resources to help you get through divorce.
