One common worry people have approaching divorce focuses on health insurance. During a marriage, one spouse usually will maintain a health insurance policy for the whole family, including the other spouse. Once a divorce is filed, what happens with health insurance for that spouse who receives insurance through the other spouse? And what happens after the divorce becomes final?
First, when a party files for divorce in Missouri, state law requires that the spouse maintaining insurance for the other spouse and the children must continue that coverage until the entry of final judgment in the divorce. So, for the pendency of the divorce, the spouse receiving insurance will remain covered.
Second, in looking at what happens post-divorce, an individual has several options.
If that individual will be employed full time and qualify for insurance through work, that individual should consider that option as the most cost-effective.
If that individual will eventually be employed but will not be employed right away, that individual should consider using COBRA to continue coverage for the short term. COBRA is a federal law that allows a person to continue for a defined period (typically 12-18 months) at the rate it would cost the employer under the policy. COBRA allows for continuous coverage, but the downside is the cost – most employer plans split the cost with the employee, but COBRA makes the former spouse pay the full cost.
If the individual cannot get insurance through work and COBRA seems too expensive, the individual must look for an individual policy through the Affordable Care Act (ACA) in the individual marketplace. A marketplace policy has excellent coverage but may be costly depending upon the income of the individual (usually for individuals making less than $50,000, the marketplace plan will have enough subsidies to make it very affordable). Another drawback of the marketplace policy will be a high deductible and lesser coverage for out of network costs. Recently, the federal government enacted new regulations that allow an individual to purchase non-marketplace policies for a year at a time that have less coverage than the ACA plans and will cost less. But beware – these policies can exclude pre-existing conditions, so it may be money completely wasted if the person has pre-existing conditions.
If the individual needing insurance qualifies for Medicare by age, that option factors into the mix as well (but the individual will need to look for a secondary policy to cover the “doughnut” problem in certain cases).
Finally, if the person needing insurance has chronic medical conditions, it would be wise to bring these issues up during the negotiations of the divorce to see if the parties can agree to some type of insurance policy or out of pocket payment to help the former spouse pay for the necessary additional coverage (it may be disability or long-term care coverage, for example). If this is not dealt with prior to divorce, the chronically ill spouse could find himself or herself on Medicaid and facing bankruptcy.
If you have questions about health insurance and divorce, contact us – we can help.