Healthcare Coverage And Divorce
Today’s video reminds us that as a result of divorce, group coverage ends for the dependent former spouse. This is a very cruel aspect of the U.S. healthcare system because coverage through an employer or union is often the best coverage available to Americans and is subsidized by the employer.
Divorce is a qualifying life event which triggers COBRA, the temporary extension of group coverage for up to 36 months. It is also a qualifying life event for purchasing individual coverage or to return to group coverage through one’s own employment if one had been covered on the former spouse’s plan.
For a dependent losing coverage, COBRA is an important safety net but COBRA premiums can be shockingly expensive because the premium is the total premium (no longer subsidized by the employer) with a small administrative fee added.
We have addressed Qualifying Life Events in general and covered many specific qualifying events in these videos. One of the most vexing aspects of divorce, however, is that unlike other qualifying events it is self-reported. Divorce is often contentious and subsidized group coverage so valuable, that self-reporting can result in some gamesmanship which is unfortunate. This gamesmanship can range from attempting to prevent the former spouse from being offered COBRA in a timely manner to the other extreme of working to keep the former spouse on the group plan as a spouse. When you are not married to someone, you are not eligible to be on their group coverage as a dependent.
Another complicating factor is that COBRA regulations read as though group coverage should end for a spouse after a legal separation is formalized. In practice, however, many employers recognize the execution of the final divorce decree as the event which should trigger a divorced spouse’s COBRA right.
Although divorce is particularly cruel when it separates someone from good group coverage, it is less cruel than it used to be. Prior to the Affordable Care Act, individual coverage in most states was only offered to people who were fairly healthy because insurance companies could deny applications based on pre-existing conditions. This led to anyone in therapy or using prescribed medications for anxiety or depression being denied individual coverage in most states. Since 2014 insurers have not been allowed to consider pre-existing conditions as a factor in providing individual coverage, so thankfully, divorced spouses are no longer faced with the potential of being uninsurable once COBRA ends.
Divorce is one of life’s most disruptive events but because so many marriages end in divorce, everyone should understand the healthcare coverage implications of divorce. As always, educate yourself about our complex healthcare system, know your rights, and plan ahead.
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