What Happens to Health Insurance in a Divorce?
Divorce can often be a tumultuous and life-altering experience. Among the many aspects of life that are affected, health insurance coverage for you and your family members is a critical area that often requires careful attention from your divorce attorneys. Understanding how divorce impacts health insurance coverage is essential for ensuring that both individuals and their dependents maintain necessary health benefits during and after the divorce process. This week’s blog explores the various ways divorce affects health insurance coverage, including the legal, financial, and practical considerations involved.
Understanding Health Insurance Coverage in the Context of Divorce
Health insurance coverage is a crucial component of personal finance and well-being, as it often determines what healthcare providers are an option to you and your family. During a marriage, we often see that one spouse provides health insurance coverage for the family through their employer or a private plan. Following a divorce, it is a possibility that coverage may be altered or terminated. Not having insurance, or having altered insurance, can provide roadblocks to you when seeking any type of medical care needed. Understanding these changes and knowing how to navigate them is vital for both parties involved.
Legal Obligations and Health Insurance Coverage
In many jurisdictions, the divorce decree may address health insurance coverage, especially if the couple has children. Legal obligations regarding health insurance can vary widely, so it is essential to understand local laws and regulations. In some cases, a Court may order one spouse to continue providing health insurance for the children or even the ex-spouse for a certain period.
It is also not uncommon for the “status-quo” to be maintained during divorce proceedings. This means that it may be looked upon unfavorably if the party supplying healthcare coverage to the family were to abruptly change filing coverage for the family upon filing for divorce. A Court can order that the healthcare coverage is continued during the divorce proceeding as well. It is important that you speak with a New York Divorce Attorney at length about your options and best next-steps when it comes to healthcare coverage if you are the spouse supplying the coverage to the family. If you are the spouse receiving the healthcare coverage, it is important that you speak with your divorce attorney to understand your legal rights regarding your continued healthcare coverage.
COBRA Continuation Coverage
You have likely heard of COBRA when discussing healthcare benefits before. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, and is a federal law that allows individuals to continue their employer-sponsored health insurance coverage for a limited time after a divorce. This can be a critical option for a spouse who is losing coverage due to the divorce. Typically, COBRA coverage lasts for up to 36 months for dependents, though this period can be shorter depending on specific circumstances.
It is important to note that COBRA benefits are often more expensive than the healthcare would have been under the employer prior to the divorce. This is because the employer is not required to continue their contribution to the healthcare plan under COBRA. The employer can pass off their regular contribution to the plan to the individual continuing coverage through COBRA, as well as charge a 2% administration fee. COBRA also does not cover plans strictly for life insurance and/or disability insurance. For more information on COBRA in New York State, we have attached the Federal Government’s COBRA guide.
The Impact of Divorce on Health Insurance for Children
Your children are likely to be one of your primary concerns as you navigate your divorce proceedings. Their healthcare coverage can be argued to be one of the most important considerations, particularly if your children have a history of necessary, regular medical care.
In many cases, children are covered under one parent’s health insurance plan as dependents. After a divorce, the responsibility for maintaining this coverage may be addressed in the divorce settlement or decree. The parent awarded physical custody may be expected to keep the children on their health insurance plan, or the non-custodial parent may be required to contribute to the health insurance costs.
The divorce agreement should clearly outline who will be responsible for health insurance coverage for the children. This includes specifying which parent will provide the coverage and how any insurance costs will be shared. If one parent is providing insurance, the agreement may also stipulate that they must keep the coverage active until the children reach a certain age or are otherwise legally emancipated.
The Impact of Divorce on Health Insurance for a Spouse
Similar to what we discussed in cases where children are involved, if your spouse is providing your health insurance coverage, you will likely want to know how a pending or anticipated divorce may affect your own health insurance.
As we mentioned earlier, COBRA allows a divorced spouse to continue their health insurance coverage under the former spouse’s employer-sponsored plan for a limited period. However, as discussed, COBRA coverage can be expensive as the individual continuing coverage may be required to pay the full premium plus the administrative fee. It is important to read the full terms of your COBRA continuation and explore all options and assess whether continuing with COBRA is financially viable for you and your family.
COBRA Continuation Coverage
If COBRA is not a viable option for you due to the requirement to pay for the full premium, there are other avenues you can explore:
- Marketplace Insurance: The Health Insurance Marketplace (Healthcare.gov) offers various plans that may be suitable for a divorced individual. Losing health insurance coverage due to a divorce qualifies as a Special Event that can allow you to enroll outside of the usual open enrollment periods.
- Medicaid: Depending on income and other factors, a divorced spouse may qualify for Medicaid, a state and federal program providing health coverage for low-income individuals and families.
When shopping for a new healthcare plan, it is important to remain vigilant for scams. Unfortunately, there are individuals posing as healthcare insurance brokers will demand for money and offer deals that seem too good to be true. Don’t fall for their schemes out of your need to take care of yourself and your family.
Financial Implications of Health Insurance Changes
We have discussed the financial aspect of divorce in regards to health insurance coverage briefly so far. In this section we will focus on the financial impact of changing health insurance exclusively, as it can be significant.
Premium Costs and Coverage Options
When health insurance coverage changes, such as removing or adding dependents and spouses, so can the costs associated with premiums, deductibles, and out-of-pocket expenses. It is important to fully compare coverage options and premiums to find a plan that balances cost with your necessary coverage.
As we have mentioned earlier, COBRA can significantly increase your premium’s cost, as the employer will often pass their portion of the premium onto you.
Impact on Child Support and Spousal Maintenance
Health insurance costs can also affect child support and spousal maintenance arrangements. Courts may consider health insurance premiums and out-of-pocket medical expenses when determining the amount of child or spousal support one spouse is required to pay. It is important to address these costs in the divorce settlement to avoid unexpected financial burdens and to better understand you and/or your spouse’s financial obligations.
Steps to Take During and After Your Divorce
1. Review Existing Coverage
Before finalizing your divorce with your attorneys and the other party, review the current health insurance coverage to fully understand what is provided and what changes will occur. This review should include evaluating the coverage for all family members and assessing how the divorce will impact each individual person’s insurance.
2. Explore New Coverage Options
Start to explore new health insurance options as early as possible in the divorce process. This can include, but is not limited to: checking eligibility for COBRA, researching plans available through the Health Insurance Marketplace, and determining if you qualify for governmental assistance programs, such as Medicaid.
3. Update Beneficiary Designations
If health insurance coverage includes specific beneficiary designations or dependents, make sure these are updated to reflect the new circumstances following the divorce. This may involve notifying insurance providers of changes in coverage or beneficiaries.
4. Consult a Legal Advisor
No one knows how divorce proceedings work better than experienced divorce attorneys. You should absolutely speak with your divorce attorneys to understand what you can do to handle health insurance matters as they relate to your divorce.
5. Consult a Financial Advisor
It is also a good idea to discuss your financial options with a trusted financial advisor. They can help you to understand what healthcare options are within your budget and what may or may not be financially feasible for you and your family. Your divorce attorneys will often have connections to trusted financial advisors in the event that you do not already have an existing relationship with one.
We're Here For You
Divorce brings numerous challenges. Managing health insurance coverage for you and your family members can be a critical one. By understanding how divorce can affect health insurance, exploring your available options, and taking proactive steps (such as speaking with your divorce attorney and financial advisor),you can ensure that you and your dependents maintain the necessary health coverage. Navigating these changes with careful planning and professional guidance can help to mitigate the financial and emotional impact of this major life transition.
As experienced divorce and family law attorneys, our office is skilled at moving cases along efficiently, while still ensuring your interests are represented in your agreement. In addition to a skilled and experienced attorney, it is also important that you work with experienced mental health professionals. They can help you navigate this uncertain period of your life with grace and clarity.
If you are ready to move forward with a divorce or a separation agreement, we are here for you. Our dedicated and experienced attorneys will make sure that your interests and needs are heard and advocated for throughout the litigation/settlement process. Our mission is to protect what’s most important to you. You can reach us at [email protected] for more information, or call us at 914.615.9058.
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