Divorce Health Insurance

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How many of you reading this are trained project managers? For those of you that are, you know that when planning a project, a crucial step is to identify all contingencies and factors that could impact a successful outcome/smooth transition or implementation. It’s an exhaustive process requiring extreme focus and high attention to detail which is why those who are skilled in the art of project management usually command a lucrative salary and are in high demand by employers.

Unfortunately, most of us are not trained in this discipline and we begin to realize our limitations fairly quickly when we take on a project with many moving parts. With that fact in mind and a desire to best serve our clients and help the community at large, we seek to pinpoint areas that might be overlooked in the enormous project that is “divorce”.

For this installment, we’ll lead by asking, “What is your insurance situation?” We assume that you’ll be spending time hashing out the re-writing of wills and allocation of life insurance but what about the more immediate need of health insurance? In many marriages, one spouse maintains insurance for the entire family through their employer-offered coverage. Did you know that once your divorce is finalized, you generally can not stay on your former spouse’s plan? Your kids can but you cannot.

An article in Forbes addressed the question of divorce health insurance a couple of years ago and stated that, “Once the divorce is finalized, you (the non-employee spouse) can qualify for COBRA coverage, but remember: COBRA is temporary and lasts only up to 36 months. If you’re divorcing, (our) advice would be to get your own health insurance as soon as possible. Maintaining health insurance coverage is a major concern for many divorcing couples, and in fact, it’s one of the main reasons why some couples now opt for a legal separation instead of divorce. But, if you do decide to legally separate rather than divorce, please tread carefully. Some health insurance companies view a legal separation as essentially the equivalent of divorce, and so they will not continue coverage for a separated spouse. Do not take this matter lightly. Be sure to check with your health plan provider regarding their policies and restrictions. Health insurance companies have stringent requirements for when and how they must be notified of your divorce; and failure to do so could constitute insurance fraud. Your attorney can help you understand the laws as they apply to your specific case.”

The good news is that health insurance can be negotiated as part of a divorce settlement. In many instances, one parent is designated as the “primary caregiver” for any underage children in the family. Depending upon the ages, number and needs of the children, that spouse may not have the ability or time to take on the sort of employment that would provide insurance to meet their needs. Another consideration is skill and education. If one spouse has the skill, education and experience to command a position that offers better benefits, the insurance available to a spouse who may have worked to put their partner through school or stayed home with young children while forgoing their own education and opportunities to gain experience may be significantly less comprehensive as they enter the workforce. The rise in divorce of those over the age of 50 has added another group to this list. Spouses who did not work outside the home and may struggle to find a viable position even if they have an education due to age, advancements in technology and lack of experience. This is the demographic most in need of healthcare due to advancing age.

The American Institute of CPAs addressed this in an article on their 360 Degrees of Financial Literacy website. They state, “Because health coverage is such an important benefit, some divorce decrees stipulate that a spouse who provided health coverage for the other spouse or family during the marriage must continue to provide such coverage following a divorce. This is especially true if the other spouse didn’t work outside the home and has no immediate access to health insurance. Neither an insurer nor an employer can deny such court-ordered coverage when children are involved. The spouse who carries the health coverage may have to pay additional premiums to continue coverage for (their) ex-spouse and (their) children, depending on the policy provisions. Some group policies will routinely allow (them) to continue full coverage for (their) family even after (their) divorce. Of course, this may change if (they) later remarry and want to include (their) new family on your policy. In any case, the premium for a group family plan may be less expensive than single coverage for two adults.”

A recent new factor in the insurance considerations of couples who are divorcing is the Affordable Care Act (ACA) also known as “Obamacare”. We know that some of you love it and some of you hate it but we’re not here to debate that or discuss how it is funded. Let’s address the relevant facts. First of all, the ACA has eliminated the concern of finding a new plan if you have a pre-existing condition. It also makes it easier to purchase insurance if you don’t have an employer-offered option. We’ll file those two factors in the “pros” column. In the “cons” column, we have the fact that deployment of the program has been extremely problematic and there are continuing legal challenges that put the future of the program in doubt.

The point that we’re trying to drive home here is that there are many different options available to you if you find yourself in any of the situations outlined in this article. As it often is, the first step is awareness of the issue. Knowing some of the available options hopefully will bring you some comfort as well but the bottom line is, make sure to retain competent counsel to guide you through the “project” that is your divorce. Remember that when dealing with the emotions of a divorce, you are even more at risk of making painful mistakes than you would be under normal circumstances. Even if you are a successful project manager, a lot of your success is likely based upon knowledge of your particular field within project management. Think of your divorce attorney as a project manager who specializes in divorce. They can easily identify the milestones that must be reached, establish a timeline with goals and an end date and handle any change orders that may pop up as the project moves along. Take note that if that last sentence sounds like complete gibberish to you, you would be well advised to consult an attorney.

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