Health Insurance after Divorce

Most people are aware that they will lose the health insurance coverage they had under their spouses’ plan upon a divorce. One concern often voiced by my clients is when the coverage will end since the divorce may be signed by the Judge before they are able to secure alternate coverage. Not to worry. You can keep the coverage you have through your former spouse for up to 60 days if need be. How does this work?

COBRA, which is the name used for the Consolidated Omnibus Budget Reconciliation Act, requires most employers with group health insurance to offer terminated employees and divorced spouses of current employees the opportunity to purchase health insurance.
If you are the divorced spouse of an employee you may receive coverage for up to 36 months provided you pay 102% of the employers cost of the insurance (which is one reason why most people don’t elect the coverage).

Once you are divorced the employee spouse must notify his/her employer of the “life change” event. The employer then has 30 days to notify the divorced spouse of his/her right to coverage. That person then has 60 days to elect coverage. If he/she elects coverage they must pay from the date of the notice to have retroactive coverage.

What if he/she does not elect coverage? The best answer is to have alternate coverage in place within the 60 day period to avoid any gap. While you can always wait the 60 days to elect coverage so you can get sort of a “free ride”, keep in mind that you will pay 102% of the employers cost. And since many plans have a lot of “bells and whistles” you may find the cost is rather high.

Another concern is your ability to get coverage! If some serious condition is diagnosed during the gap period you may not be able to secure alternate coverage (which is the main reason why COBRA was established in the first place) so you may have no choice but to elect the COBRA option and incur the expense.

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