How Will Divorce Affect My Health Insurance?
We’ve talked about how filing your tax returns changes when you get divorced. Another major change that accompanies divorce is your health care coverage. Similar to filing for taxes, health insurance may not be top-of-mind during the divorce process, but it’s important to know what’s going to change so you don’t put yourself or your children at risk of being uninsured.
With the state of American healthcare, this can be a complicated issue. Here are some considerations for handling your health insurance post-divorce in 2020.
What Happens to Your Health Coverage When You Divorce?
When a party files for divorce in Missouri, the spouse is required to maintain health coverage for the other spouse and any children until the entry of Dissolution of Marriage (judgment when it is signed by the judge). Federal law mandates that health insurance coverage ends as soon as you are divorced. This means that an employer will no longer cover a spouse under their healthcare policy once the divorce is finalized. But most insurance plans do allow an ex-spouse to receive health insurance through COBRA for up to 36 months after a divorce.
It’s important to note that health insurance companies have strict rules around divorce. If you don’t notify them of your divorce in a timely manner and with the proper documentation, you put yourself at risk of insurance fraud.
When it comes to children’s health coverage, they are generally unaffected by divorce. The parent who has been covering the children right before the divorce needs to continue to cover the children until the judge orders otherwise.
What Are the Options for Insurance Coverage After Divorce?
If you find yourself in the position of losing health coverage once your divorce is finalized, you have several other options for replacing that coverage.
Current Employer Healthcare Plan
If you are employed full time and qualify for insurance through work, you should ask your employer if they have insurance as a benefit option. If you are not currently employed, check the cost of your spouse’s COBRA insurance. Although it may be expensive, this may be a good option for you in the short term until you find a job that offers insurance as a benefit.
COBRA is a federal law that allows for continuous coverage after divorce at the rate it would cost the employer, typically 36 months.
All companies with at least 20 employees MUST offer COBRA coverage.
The downside to COBRA plans is that the premiums can be expensive so it’s often more cost-effective to seek coverage in the individual marketplace through the Affordable Care Act.
Affordable Care Act (ACA)
A marketplace policy can have great coverage but despite the name “Affordable Care Act,” the plans can be expensive. These plans come with high deductibles and limited coverage for out-of-network healthcare. The cost of the plans depends on the income of the individual.
While the federal government has recently begun to offer policies outside of the marketplace that are less expensive, they have less coverage than ACA plans and they often exclude pre-existing conditions. And many of these insurance companies take cruel liberties in defining pre-existing conditions.
This is a federal program administered at the state level that provides health coverage for low-income families based on need. A spouse can apply for Medicaid if they can’t afford health insurance.
Some married couples do a “Medicaid divorce” when planning for retirement because they realize they make too much income jointly to qualify for nursing home assistance. This is a strategy wherein each spouse may qualify for Medicaid without losing a lot of their assets.
Considerations for Chronically Ill Spouses
It’s wise for a spouse with chronic medical conditions to voice their issues during divorce negotiations so that an agreement about insurance can be reached. If this is not dealt with prior to the finalization of the divorce, the chronically ill ex-spouse could end up on Medicaid.
When the divorce is finalized, you will lose health coverage provided by an ex-spouse. You need to consider your healthcare coverage options before divorce so that you can avoid gaps in coverage.
To have specific health insurance questions answered about your divorce, contact Marta Papa for a referral to a healthcare professional.