The Affordable Care Act Part 3

COBRA and Divorce

A judgment of divorce is generally considered a “qualifying event” that requires you to be removed from a health insurance policy you have with your now former spouse. Once the employer determines that you are divorced, you would receive a notice that coverage was being terminated. You would then be given a certain period of time to elect to continue to receive coverage under COBRA and would be instructed on the steps you would need to take if you wanted this coverage.

COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1985) is a federal statute that, among other provisions, allows you to purchase health insurance from your former spouse’s employer for up to 36 months if you lose coverage due to a divorce. The problem is the cost. Since the employer is no longer subsidizing the coverage, you will pay the rate that the former employer pays for the coverage, plus 2% for administrative costs.

In the past, one reason why many people elected coverage under COBRA was so they would have continuing coverage for a pre-existing condition. But with the ACA, the insurance company cannot deny you coverage or charge a premium due to a pre-existing condition.

That does not mean, however, that COBRA will not be right for some people. You may want to obtain COBRA insurance for one of the following reasons:

• In order to keep access to a certain network of providers; or
• If you have used up your deductible for the year and don’t want to start over by selecting a new plan.

Keep in mind that once you enroll in a COBRA plan, you cannot enroll in an exchange plan unless it is during “open enrollment.” This year that period is from October 1, 2013 until March 31, 2014, but in the future it will only be from October 15th until December 7th.

If you are ending your marriage and you live in New York, you might want to look at nystateofhealth.ny.gov so you can determine if you would be better off finding a plan on the marketplace instead of obtaining coverage under COBRA. That way you can compare prices and the various plans and make an informed decision. If you fail to do so you might be stuck with an expensive COBRA option for quite some time when a plan under the ACA would have worked just as well.