Divorce and Health Insurance Benefits: What to Expect

Divorce causes major issues with health insurance benefits. Many families have employer provided and/or paid for health insurance benefits that cover the entire family. It is not uncommon to see situations where the other spouse is a stay-at-home parent, with absolutely no access to health insurance benefits, or employed at a job with either no health insurance benefits available or those benefits available at a substantial cost. After a divorce, the spouse with the family health insurance coverage can no longer cover the other parent. They are no longer “family” members who can take advantage of one health insurance policy. How to then ensure that everyone stays insured does become an issue for negotiation and/or divorce litigation.

How Can I Continue Benefits Without an Additional Cost?

If both parties do not have health insurance benefits available and if the cost of obtaining those health insurance benefits for the other party after a divorce become prohibitive, there is one way to continue benefits without additional cost. It is to enter into a separation agreement but delay divorce. That way, the parties do remain married, and they can stay on the same health insurance plan even though they are separated. The parties can consent to waiting for one, two or more years before either one files for a divorce. While the parties will remain married, their property, custody, and support issues will most likely be addressed in their separation agreement. Under some circumstances, this is an optimal resolution. For example, what if both parties want one spouse to remain at home for several more years with young children, but they do still want to separate and divorce? This option works for them.

They can separate, agree upon getting a divorce and all the terms that they must agree upon, but delay the final divorce so that they can keep cost effective health insurance benefits in place.

Enforcing a Separation Agreement

The above example can provide some difficulties that must be discussed in detail with your divorce attorney. For example, if you separate but do not divorce, your federal tax filing status may be affected. Also, in some states, it is not as easy as in other states to enforce a separation agreement. Or, in yet other states, it is possible for one spouse to take the advantages provided by the agreement for a year or two and then go to court and seek entirely different forms of financial relief in a divorce action. Only a divorce attorney licensed to practice in your state can advise you on these issues.

How Can COBRA Coverage Help with Divorce Health Insurance?

Another option for couple’s divorce is COBRA coverage. COBRA is a federal law which mandates that a person covered under a health insurance policy be given the right to continue that coverage, at their own cost, for a set period if certain requirements exist. For example, if you obtain a divorce and your spouse had family health insurance coverage through his employer, the employer commonly provides COBRA coverage for you after the divorce. That COBRA coverage would require that you have the same health insurance policy, although your coverage would now be individual and not family. You would have to pay the employer’s cost for that individual policy.

It is not uncommon for a stay-at-home spouse or a spouse who has less income or employment options to obtain COBRA coverage and to negotiate that their spouse pays for that coverage for a specified time period after the divorce. In doing so, this gives the spouse who did not have coverage available some time to either obtain employment with coverage or become financially settled and able to afford their own coverage.