Health Insurance Laws & Divorce
Health insurance often becomes a key concern when a divorce occurs. Many spouses rely on coverage provided through an employer-sponsored plan, which usually encompasses the employee, the spouse, and their children. Upon the finalization of a divorce, the spouse who does not work for the employer typically loses eligibility for continued coverage under that plan. Examining health insurance alternatives early in the divorce process may help avoid gaps in coverage and minimize expenses.
COBRA and Continuation Coverage
The Consolidated Omnibus Budget Reconciliation Act (COBRA) grants qualified individuals the right to keep group health coverage for a specified period after events such as divorce. To qualify, the employer must generally have 20 employees (or full-time equivalents) on more than 50 percent of its typical business days during the previous calendar year. Following a divorce, the non-employee spouse may continue coverage under COBRA but must often pay up to 102 percent of the total premium cost, which can be significantly more than what was paid during the marriage if the employer contributed toward the premium. Some employers that are not subject to federal COBRA have similar policies allowing for continuation of coverage, although details and costs may differ.
Notification and COBRA Timelines
Timely notification of the divorce plays a central role in COBRA eligibility. Once a final divorce decree is issued, the covered employee or another qualified beneficiary generally has 60 days to notify the health plan administrator about the divorce, which is a qualifying event for COBRA. After receiving notification, the administrator has 14 days to notify the non-employee ex-spouse of the right to elect COBRA. That individual usually has 60 days from the date of the election notice (or 60 days after coverage is lost due to the divorce, if later) to decide whether to enroll. If enrollment is chosen, the first premium payment is generally due within 45 days.
The Affordable Care Act
Losing health insurance because of divorce triggers a special enrollment period under the Affordable Care Act. This enrollment window lasts 60 days from the date of lost coverage. During that time, an individual can select a health insurance plan through the Marketplace, even outside the standard open enrollment period. Depending on income and eligibility, some individuals may qualify for premium subsidies. This option may serve as an alternative to COBRA, especially if the cost of COBRA coverage is higher than available Marketplace plans.
Children and Health Insurance
A divorce generally does not end a child’s eligibility to receive coverage under a parent’s health plan, as long as the child continues to meet the plan’s definition of a dependent. Federal law forbids employers and insurers from denying coverage to a child based solely on living arrangements or income tax dependency claims. When disputes arise over a child’s coverage following a divorce, families may wish to address the issue through an enforceable agreement or order.
Qualified Medical Child Support Orders
A Qualified Medical Child Support Order, often called a QMCSO, is a court order that requires an employer and a health insurer to provide details about a child’s coverage and to process medical claims for that child properly. In addition to preserving coverage, a QMCSO can enable direct reimbursement of the child’s medical expenses to the non-employee parent. Courts frequently use QMCSOs to ensure that children retain ongoing access to necessary healthcare benefits after a divorce.
Addressing Health Insurance in Support Agreements
Health insurance costs regularly play a part in determining spousal support and child support. Some agreements or court orders require one spouse to pay for a portion of the other spouse’s or the children’s premiums. Others may mandate direct third-party payments to an insurer on behalf of a former spouse or child. Specifying health insurance responsibilities in support agreements can reduce future conflicts and help both parties maintain adequate coverage.
