Health Insurance and Divorce

November 1, 2012

 In a marriage where one spouse is the primary wage earner, one concern is maintaining health insurance for the non-career spouse. When completely on their own, how does a non-working spouse acquire health insurance coverage?

COBRA Coverage

The Older Women’s League (OWL) worked hard to get the Consolidated Omnibus Budget Reconciliation Act (COBRA) law passed in 1986.  It allows spouses to continue to get health insurance from their ex-spouse’s company, if it has at least 20 employees, for three years after a divorce.  The normal COBRA provision states that if an employee is fired or leaves a job, he or she can get health insurance from that company for 18 months.  However, in divorce, it is generally extended to 36 months. The participant should verify with their employer whether they offer extended COBRA coverage.

The non-employee spouse must pay the premium as agreed.  If a premium payment is missed, the health insurance provider can drop that person and is not required to reinstate them.  So it is critical to ensure prompt payment. COBRA may sound like a good idea since it is a quick and easy solution, but it is imperative to shop around as COBRA is typically very expensive. Also, due to COBRA’s temporary nature, it is better for a non-career spouse to research his or her options and have lower premiums in place before the divorce is final or soon thereafter, rather than gamble that they will remain healthy until they obtain other coverage 3 years down the road. Since it isn’t uncommon for people in their 40’s and beyond to develop severe health problems, it is possible they could become uninsurable.  

Pre-existing Conditions

Those applying for health insurance in the private health insurance markets of most states are often denied coverage or may be charged significantly higher premiums if they have a pre-existing medical condition.  

The Patient Protection and Affordable Care Act (PPACA), which became law in March 2010, appropriated funds for the creation of a temporary federal high-risk pool, known as the Pre-Existing Condition Insurance Plan (PCIP) program.  The PCIP program provides access to insurance for individuals unable to acquire affordable coverage due to a pre-existing condition.  States were given the option to run their own PCIP with federal funding, or to allow the Department of Health and Human Services (HHS) to administer the PCIP in their state.

Twenty-seven states elected to administer a PCIP for their residents, while 23 states and the District of Columbia opted to allow HHS to administer their PCIPs (New Hampshire and Maine have state programs.) In order to implement various provisions of PPACA, including the PCIP program, HHS created the Center for Consumer Information and Insurance Oversight (CCIIO) in April 2010.  PCIP enrollment began as early as July 2010, and all PCIPs will run until December 31, 2013, after which the enrollees will be able to transition to a plan under their state’s new health insurance Exchange.

Advise clients with diabetes, cancer, AIDS, depression, severe mental health or any medical condition that prevents them from getting individual insurance to check into their state’s program for people with pre-existing conditions.

Where to start

The cost of health insurance can be a significant part of the budget for the non-employee spouse. It is important to address this during the divorce process to ensure he or she has access to the best coverage available at an affordable cost. A Certified Divorce Financial Analyst can help your client create a complete budget, including health care coverage, that can be a useful tool in the negotiation process.

« Go back to Divorce Newsletters