Health care insurance is widely considered to be a necessity of life. Only the wealthiest among us could afford to pay for medical services without the assistance of insurance. Families traditionally have an insurance policy that covers all family members, often provided by one of the spouse’s employers.
For couples who are divorcing late in life, health insurance can become a major headache. That is because insurance for older people is generally more expensive than for the young, and individual policies are usually more expensive than group policies provided by employers. When faced with a late-life divorce, it is important to be proactive in planning for health insurance post-divorce.
In most states, a spouse carrying the family health insurance coverage is prohibited from simply dropping the dependent coverage for a spouse during the pendency of a divorce. The reality, however, is that when the divorce finally happens, the dependent spouse will no longer be eligible for the coverage. It is therefore important for the dependent spouse to be making health insurance plans while the divorce is in process. Be sure to consult with an attorney in your state.
If spousal support is an issue in the divorce, knowing the cost of post-divorce health insurance is important to the dependent spouse. Such insurance can be expensive and could impact a potential award of spousal support. This is especially true for late-life divorces in long-term marriages.
1. Insurance through employer
The best case scenario is that the dependent spouse can pick up insurance through her own employer. If this is not the case, then other options must be pursued. At a minimum, the dependent spouse can maintain coverage through her spouse’s employer plan for up to 36 months, provided she pays the required premiums. This is known as COBRA coverage, provided under the Consolidated Omnibus Budget Reconciliation Act. At the end of the 36 months, the coverage terminates.
If a dependent spouse will reach Medicare age during the 36 months of COBRA coverage, then that makes for a pretty easy transition from the marital insurance to individual insurance coverage. If this is the case, the COBRA coverage would end when the dependent spouse became Medicare-eligible.
2. Individual health care plan
If employer-sponsored insurance is not available, and COBRA coverage runs out, a divorced dependent spouse is faced with obtaining an individual health care plan. Such plans offer a wide range of options, including comprehensive coverage, a choice of low or high deductibles, preferred providers networks, Health Maintenance Organizations, and plans that only cover catastrophic illness.
Purchase of individual plans has been made a lot easier under the Affordable Care Act (also known as Obamacare). If a dependent spouse is faced with purchasing an individual plan, she can buy insurance through a state or federal insurance exchange. Depending on one’s annual income, a government subsidy may be available to help with premium costs.
Prices for individual plans vary widely depending on the coverage options. When going through a divorce, it is important to compare apples to apples when it comes to equitable distribution of marital assets and spousal support. A dependent spouse should be sure to establish the cost of maintaining the level of coverage she enjoyed under her marital insurance plan. This amount factors into her financial need post-divorce.
The important thing to remember about divorce and health insurance is that you should not ignore the issue while the divorce is in process. A good divorce lawyer will talk with you about it, but don’t assume that will happen. Be proactive and seek your lawyer’s advice. Divorce is governed by state law, so make sure to consult with a local lawyer before making any decisions with respect to your health insurance when a divorce proceeding is instituted.